The market's impressive hold of the Monday lows has continued through the day, as we broke above the early morning highs and also Tuesday's highs. This once again underscores that 975 area in ES as important support.
In a bull market, corrections tend to be relatively shallow and flat, serving as a springboard for higher prices to come. That is what we saw in the period from May to early July. The recent pullback is also taking on this quality so far, as the move back to Monday lows found eager buyers--and eager follow through on the buying.
Note how this idea of flat corrections also occurred on an intraday basis (chart above), as we consolidated the early morning gains from 9 AM CT past 10:30 AM. During that correction, intermarket themes remained in their bullish mode and the NYSE TICK continued to indicate more buying than selling pressure.
Observe also how volume dried up during the morning correction and expanded quite meaningfully on the upside breakout. As noted in the earlier post, that is indicative of institutional participation, showing that large market participants are behind the market strength. As long as we stay above that breakout point (horizontal red line above), we have to continue to view the market as back into its prior multi-day range (above its 8/12 lows), aborting its short-term downtrend.
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