Market Recovery
The S&P today closed up a whopping 48.34 points today which was a 2.4% increase from yesterday. This followed on the heels of a 40.15 point move yesterday. The Dow Jones Industrial Average was up 421.28 points today which represented a 2.43% increase from yesterday. It’s hard to ignore such bullish action. The volume on both days was significant. It was greater volume than any of the prior down day’s volume. After dropping 6 of 7 days, the market has recovered almost all of the losses.
In fact, when you look at the Fibonacci retracement (see chart below), you’ll see that the pullback came in right about the 38% retracement level. This level was right about the 1980 level which was a resistance area back in July and a support area in September. It now acted as a support where the drop ended and the recovery began.
You will also notice on the last 3 market pullbacks, the RSI reached or almost reached the oversold area. Stochastics was also in the oversold area each of the times. In this current bull market, each of the more significant pullbacks have represented buying opportunities. This appears to be the case once more.
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