Friday, September 04, 2009

Midday Briefing for September 4th: Breaking Higher

Here we see the transition pattern mentioned in the morning briefing playing itself out, as the intense selling from 9/1 dried up and now has led to an influx of buyers today. As a rule, the longer it takes for the market to bottom, the greater the subsequent rise. That is partly due to the fact that more shorts become trapped after extended bottoming, contributing to the market's upthrust once buyers enter.

Note how the weakness in the U.S. dollar has played into the pattern: when we see intermarket themes cooperating with a setup, that gives us greater confidence in the trade.

1 comment:

Jay said...

Hey Dr. Brett, I went and got a sandwich and when I returned NQ was up 20 points at the noon pop. The volume was amazing, but the volume at the open was atypically very low. I'm wondering if this is partly due to the holiday weekend or news or the fantastic weather had traders outside until noon.