Avoiding the Squeeze

With the small caps, micro caps, and mid caps all reversing sharply higher this morning from oversold conditions, it is tough to get caught leaning short here, especially in front of the FOMC tomorrow afternoon. And China's upside reversal last night was also a good shot across the bow to not get too complacent pressing into those 1929 chart comparisons of the Shanghai. 

Still, the lingering issue for this market here in the U.S. is whether upside breakouts will sustain themselves and offer quality entry points and profits to swing traders into the rest of the summer.

As of now, inside Market Chess Subscription Services we have been stalking a select group of biotechnology issues which have distinguished themselves, in terms of relative strength of late.

Regarding the market at-large, I continue to keep an eye on the $121.50 level on the IWM, ETF of the Russell 2000 Index small caps, seen on the daily chart, below. Despite today's hammer-like upside reversal, that remains a critical level for bull to reclaim. 

Also, if you took that BIDU day-trade short idea I posted this morning, now is not a bad place to scale some wins as the market rallies.