Possible Follow Through Day

I am now in the process of confusing myself, as I don’t have my copy of O’Neil’s book handy, and I am not sure when this rally attempt officially began. Now that I think about it, I believe the day he low is made is day 1, which makes today day 4, and it appears this wild qualify as a follow through day. Whether it is or not, I am going to treat it as if it is, and will adjust my strategies accordingly. I don;t think we are out of the woods when it comes to a fairly major correction, even if we do get to a new high, which a this point is not assured. While we got higher volume today, we did not get what you would expect to see in a true follow through day. I did not watch the market very closely, so it was almost an hour before I noticed the sudden drop, and immediate move back up, that came about 1 PM eastern. It turns out that someone hacked the AP Twitter page and sent out a hoax that the White House had been bombed. The speed of the move back up has me thinking someone had a bunch of limit orders well under the market, and was sitting and waiting for this. Ok, I know, I am paranoid.

Crude oil has recovered for the near crash of last week, right into a level of resistance. Let’
s see if this resistance holds: this has been leading the market slightly lately, and if it can’t go higher, I suspect we will see the market not going higher as well.

I though the crash in gold was an excellent opportunity for a short term trade. It runs out I was right, but did not buy, so I missed it. It has established what may be a weak resistance level, and is in a pullback now. It’s hard to say if this will go back to retest the low, but if it does, I will at least try to be on it.

As usual, the bond market is not confirming the bullish mood in the stock market. The yield on the 10 year treasury has barely budged in the last week,even hitting a lower low today, when it should be rising with stocks. MACD, however, says this may be heading up soon.

The dollar index is bouncing off a support level, which is probably at least partially responsible for last week’s drop in stocks. The bounce appears to be running low on steam, so that could have a lot to do with the market rallying. The correlation between the dollar and the market still exists, it’s just not as strong as it has been in the past few years.

We have a chance here to get top a new high, but the market still has a lot of internal problems, and is probably going to be going through a fairly severe correction, and soon.

I will have the new highs update shortly.

2013-04-23 15:46:36

Source: http://samuraitrader.blogspot.com/2013/04/possible-follow-through-day.html