May 26, 2010
U.S. Stocks Rise Overnight after Reversal Bottom Formation
The June E-mini S&P 500 followed through to the upside Tuesday night confirming the daily closing price reversal bottom formed earlier in the day. Based on the
current short-term formation, traders should watch for a 2 to 3 day retracement with 1105.75 to 1122.00 the next possible upside target.
A similar pattern is developing in the June E-mini NASDAQ. Now that the reversal bottom has been confirmed, traders should watch for a 2 to 3 day rally to perhaps 1868.00
to 1895.
How high this short covering rally takes the major stock market averages and indices is up to the hedge funds and large traders who have taken control of the stock
market. Although oversold conditions have made the markets ripe for wicked retracement rallies, there does not seem to be a change in trend to up in the works. Like any developing bear market, the
major players will treat any significant rally as a new shorting opportunity.
