Upward Market Reversal Continues

By Lawrence G. McMillan

The upward market reversal that began on Tuesday when $SPX bottomed near the 1840 area, continued with passion on Wednesday.  The rally was aided by the benign Fed minutes, and now $SPX is 25 points above Tuesday’s lows.  The rally was accompanied by some very strong technicals as well.   It was almost as if the buyers were waiting for the sellers (of Friday and Monday and early Tuesday) to finish before they stepped in with a vengeance. 

The previous overhead resistance level of 1880 is now meaningless because it was sliced through on both the upside and the downside without even a moment’s hesitation.  That leaves the 1895-1900 area as resistance, because that’s where the market topped out last week.  However, given the failure of the upside breakout last week, it is difficult to trust a breakout to new highs.  About the only thing we know for sure is that the 1840 area is support.  

Equity-only put-call ratios now have a “wiggle” at the end of their charts after the strong market day yesterday, but they remain on sell signals according to the computer programs we use to analyze them...

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