Market rallied and gapped up today after the undercut and rally of the Oct 10 Lows with support arriving Friday at the 100d MA. We discussed the huge Short ETF positioning in the Focus List Video yesterday and potential for a sharp rally. The SP 500 exhibited ‘FTD type’ behavior showing good accumulation but the Nasdaq’s volume was lacking.
Is this a 1-3 day “Short Squeeze” with flurry of short covering or is the market resuming the next up leg in the bull market? Short covering rallies usually exhaust themselves in 1-3 days and why Bill O’Neil set a rule that a FTD should occur on Day 4 or later, which avoids getting sucked in too early. I am not requiring a FTD since the pullback was less than 8% as shown in my GMU videos.
No one know for sure yet but we simply use the Rally Scorecard to evaluate what we are seeing on this rally attempt.
I reviewed in the weekend Focus List video the 5 key elements I want to see recovered to confirm the short term trend has turned back up with one being the recovery of the midpoint from the multi-bar break from last Thursday….Check. And we also recovered the HVC from Oct 22….Check. Some keys leaders today showed bullish price action: LITE CIEN NBIS AVGO MU VRT APH. So far so good….let’s see how the rest of the week develops.
We did have three trades trigger in the Focus List/Stock of the Month: INCY, AXSM and FSLY
Trade well
J