For much of the trading session on Tuesday it was a volitile day where stocks couldn’t decide whether the downside or upside was the place to be. It wasn’t until late in the session where shorts started to cover sparking a late day short covering rally. Volume was tracking higher all day long and finished higher on the day. Helping stocks surge was the huge price drop in crude oil prices. Tuesday marked the 2nd day of an attempted rally and we’ll need to see continued upward movement with volume favoring the long side, heavily!
Once again New Lows (NL) outpaced New Highs (NH) by a large margin; 27 to 1. In addition, VIX and VXN failed to reach new highs as stocks pushed to new lows. Ideally, you would see NH outpace NL and VIX and VXN hitting new highs as stocks hit lows. Unfortunately we have not seen enough fear in the market to warrant a true market bottom. Like March, VIX and VXN didn’t hit new highs as stock hit lows signaling the rally forming wouldn’t last. The same will go with this rally attempt even if it follows through.
Time frames in this market must be real short, longer term positions aren’t just there yet.
