Tuesday, May 25, 2010

That's a Reversal

Not sure bulls could ask for more than that...

As mentioned this morning there was a gap between yesterday's close at S&P 1072 and this morning's open at 1067 that needed to be filled... it was 2.6% higher when we wrote it around 1045. That was a classic reversal with the gap down, reversal, and close at the highs of the day ... indeed it had a gap fill (to the upside) for the cherry on top. With a bounce off the "double bottom" of S&P 1040s no less. Technicians will love what they saw today.

In theory that should build some momentum - we'll see how the rest of the week goes. Upside targets remain S&P 1094 and then the 200 day moving average: S&P 1102. Around noon I was scanning charts and there was literally no sector strength outside of aftermarket car stores and dollar stores. So if nothing else, some working off of oversold condition might have arrived.

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