Bullish divergences at new lows on just about every single index chart out there, a roaring TRIN with an intraday high of 3.77, VIX and VXN bursting out of their envelopes, extreme advance decline readings on both NASDAQ and NYSE, equity put to call ratio exceeding .90, the list went on and what was bound to happen did indeed happen and we experienced a bullish turnaround into the close as sellers exhausted themselves and there was no way to go but up. Ten weeks of selling and the market just said "no mas". NYSE toyed with 200 dma and 2003 trendline, COMP hit 61.8% January projection at 2105, QQQQ flirted with October lows, the SOX closed the November gap, SPX looked hopelessly lost below the 200 day moving average (still an issue), the DOW broke below 10800, NDX seemed to lose vital support at 30 month ma and just when you thought all hell was about to break loose, buyers came to the rescue. The resulting closing rally erased all the heavy losses, and some, giving us bullish hammers everywhere. Capitulation? Pretty darned close if you ask me, especially for a non-fall month. These lows should hold for some time now, barring a catastrophy and more loose lips from the Feds. Next week is option expiration week and something tells me it will not be as heavily bearish as last time, if at all. There is a serious wall of worry out there with the Fed meeting on June 29th, so expect some chop. Watch QQQQ 38.23 support (May 24 low) going forward.
This entry was posted
on Thursday, June 08, 2006 at 7:10 PM.
