Although, stocks slid off day highs in the last hour, it shouldn’t be characterized as just another ‘fade’ job (profit taking/shorts getting busy) like we’ve become accustomed to lately. The overall intraday action was consistent/ steady for a long enough time (5-6hrs) to give some hope. The upside was also broadly ‘cyclical’ based which is usually a good sign. Still a repeat of last Thursday’s upside move/ Friday sell off was likely on investor’s minds(caution) in the last hour. All in, rally was essentially ‘oversized’ just from short covering as buyers didn’t really show up, notably in the last hour, but it could be said they have ‘nibbling’ in as noted >1249 zone recently to offset the sluggish finish. Enough was enough you could say, considering 1292.50 was hit just below ie.example of SPX 1295 noted on shorts wishlist. In all, it’s probably best market didn’t touch 1295 in one big swoop and closed off high at1287SP. It gives some room and chance to built/accumulate on today’s action for a chance to blow shorts away waiting for 1295/1300. Simply, oversized can become even more oversized with doubters (long and shorts) abound to todays rally.
Why the move?...
Quite simple, a few of the catalysts looked for here this weekend were touched today…1) Better than feared eco’ data, China and US eco and corporate (BBY) and Japan capex survey 2H guide up… 2) TSY selling off / out of safety from under 3% to 3.10 just this week so far, 3) just plain old relief technical bounce... "The ingredients are there for an oversized short covering with idle longs and scary wary shorts in the same mindset. The set up argues for a partial recovery/bounce..."
It’s going to take much more to kick start and resume the long-trend, today was hardly perfect…but at this point the Bulls will take anything…