The tide certainly turned today. This was another day for the record books. The big headline will be the Dow having its biggest one-day point gain but even by the measure that truly matters, percentage gain, it was a huge day. According to CNBC the Dow had its 6th best percentage gain ever and best day in 75 years. The Nasdaq had its biggest percentage gain since 2001. Who needs those pesky trading curbs?
It's worth taking a look at the StockCharts.com market summary to see what outperformed today. Some stand-outs include Natural Gas and Oil Services each up 20% while Broker Dealers were up 19%. Some country ETFs had stunning moves too, like Australia (EWA), Brazil (EWZ), Mexico (EWW) and South Korea (EWY) each being up more than 20%. It just goes to show how oversold those were because they're just back to where they were a few days ago.
So many indices & stocks broke their steep short-term downtrends today but are still locked in downtrends on longer timeframes. I think trend traders have no choice but to look for opportunities to sell this bounce. The first obvious resistance I see is around last Monday's gap. I imagine there were a lot of people who got long there -- happens to be near Dow 10,000 -- and would love to get out at break-even. So those gaps could be tough to get through.
One upgrade today.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Lat(+) | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
That's an excellent point about last Monday's gap being resistance. I know I bought a bunch on Monday and I've been wanting to breakeven on those buys. I haven't read this point anywhere else but I think you're right on that that's the first line of resistance.