Yesterdays strong reversal off the morning lows may very well have marked a low for this market. Not a generational low. But one that could lead to higher prices into the summer. Why? Because the size of a wick matters and yesterday's price rejection offered a wonderfully sized wick at the closing bell.
Previous price rejections have sparked at a minimum a short term relief rally.
If you read yesterdays Morning Quickie you know I was looking for a morning dip to get bought to possibly mark the end of this recent pull back.
I would argue that the market needs a morning dip to reverse the downtrend. When buy the dip returns, we may very well have seen our bottom for this most recent pull back.
With the market down some 1%, a late afternoon rally brought it back into positive territory. The dip was bought with the reckless abandon we've grown so accustomed to over the last few months.
More telling was the action for the VIX and VXX.
That key 20 level was broken to the downside for the VIX
and the VXX remains a great tool for intra-day market action. Yesterday the VIX began melting lower a good half hour before the market bottomed out.
Keep an eye on both during today's session. If both continue to melt lower this market could see a strong rally to end the week.
Brexit Brexit Brexit. If everyone is talking about it, the market has already priced it in. Look at all the events the last 5 years. The market would rally and find a bottom despite all the negative news and events. Why? Because it was already priced in.
Finally: Continue to keep an eye on the financials. They have been the leader, and started to decline days before this market started to crack lower. If they can muster a recovery, we could see a strong rally.
Have a Happy Fathers Day!