Short-Term Support Held And Dip Buying Still In Effect

Support holding strong, dip-buyers still flying in at any moment of weakness.

Yesterday was a sound day for the bulls from a technical standpoint. For one, the S&P 500, by a large margin, saw a huge uptick in volume from the day before. Which is good, because I kind of thought the market was dying out on us with how dull and uninteresting it was. But yesterday saw the market sell-off nine points before the dip buyers jumped in and rallied the market one whole point into the green.

And that is where the frustration for the bulls come in because the market doesn’t rally hard when it is already in the green, but only when it is retracing market losses from the day prior, or in the case of yesterday’s trading session, from that morning.

I kept my long exposure the same, as technically the market looked pretty good to me at the close. The support from the Darvas breakout held, and held strong, as you can see below in the chart, and managed to wipe out the day’s losses as well.

The intraday inverse head and shoulder pattern on the 5 minute chart of SPX came back too, which I was glad to see, as that has been missing of late. VIX finished higher, but again, it was below 10, and 62% of stocks are still trading above their 40-day moving average, which isn’t great, but it is adequate and better than some of the readings we have seen over the course of this year.

Following the dip buy yesterday, I am very interested in seeing whether the bulls can follow up with a solid rally today that can take the market to new heights. I think there is a solid chance of that happening.

S&P 500 Technical Analysis