Whatever hope bulls were hanging on too was quickly quashed by Monday's gap down; yet Tuesday's trading different bailed them out.
The NASDAQ did a little better by closing with a (potential reversal) inside day. A gap higher would offer the possibility for a bullish morning star—not to be discounted as a trading opportunity.
No surprise to see technicals net bearish with momentum oversold.
The S&P also closed with an 'inside day,' although Tuesday's candlestick was more neutral than that for the NASDAQ. On the plus side, the S&P was significantly outperforming the Russell 2000, although long term, I would be happier if this was the other way around.
The Russell 2000 had the most bullish candlestick of the lead indices yesterday. Unfortunately, it delivered a downtick in relative performance against the NASDAQ.
However, the index retained the potential to surprise. One thing to notice was the trend in On-Balance-Volume had flattened since February, so I'm not sure the losses we were seeing since April's 'bull trap' reflected big money selling; more likely was stealth buying to hoodwink retail stock holders to sell.
Seller beware.
Action in the indices didn't look great, but we were closer to a bottom than many would be prepared to accept. Remember, bottoms are easier to spot in hindsight, but if you are an investor with a buy-and-hold mentality, then back up the truck—you need to be a buyer here.