A positive day yesterday. Suggestions Brexit may not happen invited bulls back to the market.
Action to this point had the look of a pullback swing low (at least as from Thursday's action), so it was easy for buyers once it was clear there was a strong pre-market. What was disappointing was the late sell off, which probably did more damage than Friday's selling, but this can be rectified with a close today, Tuesday, inside the upper part of yesterday's intraday range.
For the S&P, yesterday's action meant an inverse hammer crossover of the 20-day and 50-day MAs. It's interesting to see stochastics [39,1] court the bullish midline in what would traditionally be a buying opportunity. So, on the chance bulls are able to open the S&P above yesterday's close, then yesterday's damage on the intermediate time frame (up to 3 weeks) may be slight.
For the NASDAQ, yesterday finished with a bearish black candlestick. It would be particularly damaging if today this was to be followed with a lower close, as holding on to Thursday's swing low, or even the trading range lows of May, would look unlikely.
The Russell 2000 did slightly better as it wasn't sold off as hard as the Large Caps. This is better news for bulls since money looks to stay with more speculative issues. Rate-of-Change for this index has also posted a new high as the index shifts to a more bullish stance.
Currently, the Semiconductor Index had been my preferred index of choice for bulls, but most of the gains were made pre-market with it closing with a bearish 'black candlestick'. However, the index still looks well positioned for further gains.
For today, watch pre-market action closely. A gap down will set up for a full day of weakness, but if buyers can defend yesterday's close and hold on to the first 30-minutes of trading, then it may be able to catch shorts on the wrong side of the trade and fuel further buying.
Open action will be key...