The S&P also enjoyed a nice gap higher off Friday's close and finished the day at the day's high. Volume was better (not surprisingly) as this still looks to be a developing swing low. Buyers could continue to treat this as a tradable opportunity with stops on a loss of 2,630; the lows of a 'bullish morning star' pattern. Technicals are not great but at least momentum (Stochastics) is oversold enough to suggest a buying opportunity is available.
Likewise, the Nasdaq enjoyed a bigger bounce but the decline from highs has hit it hard (relative performance is tanking and technicals are weak). The resulting bounce may gain more in absolute terms but the bounce is also more likely to fail; look to November and October swing highs as the potential stumbling blocks for such a rally.
As a final note, the Semiconductor Index continues to shape a traditional double bottom with a fresh 'buy' signal. Risk is measured off a loss of 1,143.
For tomorrow, I will be looking for more of the same or at least a defense of the second swing low. Santa will be here soon with his rally and this would be an ideal starting point.
You've now read my opinion, next read Douglas' blog.
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