July 8, 2010
The equity markets enjoyed a nice rally day Tuesday as the oversold condition finally got the better of the sellers and S&P 500 futures bounced over 30 points. It was the largest single day rally in weeks and has brought the index back to its 20 day moving average. The futures are following through with some gains in pre market trading but we do have European central bankers speaking shortly which is worth monitoring.
Given the strong momentum in yesterday’s trading more initial upside testing can be expected for Thursday morning but often the morning session will offer two way trading. The day after a trend day usually spends much of the next morning consolidating and testing both sides of the trading range but then can offer a better breakout situation in the afternoon. So be careful and do not chase price especially in the morning session. The market has moved quickly higher but the overall long term picture is still negative.
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