As we expected, the stock market rallied up and out of the absorption area. Most of the advance came in the Globex trading hours prior to the US session open.
Stock Market Rallies but can it Consolidate & Hold its Gains?
Although the close was positive, it wasn’t what we might normally expect on a break out. Volume was lighter than expected, as well.
So now the question becomes: Can the stock market hold its gains?
I am anticipating some back and forth trading tomorrow to consolidate the rally seen today. The consolidation already started today, so it could end early tomorrow. We will see.
Danger: Up Thrust
The obvious danger for the bulls is an Up Thrust. A pullback to yesterday’s high around the 1277 – 78 level would be normal, and we would expect the market to rally away from this level if the buyers are to retain control. So, 1277-78 could be a good buy level if the market goes to that area and support holds tomorrow. If the market starts driving down below the cluster of closes we saw last week, however, then the odds strongly increase for an UT.
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