06Jun10:15 amEST

Cooling Off, One Way or Another

On the back of an impressive two-day bounce, the broad market has the look and feel of near-term consolidation this morning. After all, it was just on Monday that it appeared as though we were on the verge of a more pronounced washout, the likes of which had perhaps been building up throughout the month of May. 

Instead, bulls rose to the occasion and put at least a temporary floor underneath the market. Since then, bears have been the ones on the run. 

All of that brings us up to the present, where our focus is on what we keyed off yesterday with Members: Into dips, it was important for bulls to defend the small caps, especially. The reason why the IWM continues to be so important is that those small caps were the ones which looked most vulnerable late-last week for a total wipeout. But then a funny thing happened on Monday; In the face of another ugly tape the IWM flipped green and flashed a true divergence given the last few days of broad market rallying. 

Hence, when we observe the IWM hourly chart, updated below, the same $149 level just below ought to be defended by bulls into digestion days to keep dips shallow. 

Also note crude oil flipping green here, via USO, as energy stock came sprinting out of the gate as a potential short squeeze in the beaten-down energy complex may very well be underway. 

Divergence Alert: Something ... Shake Shack is Spending the ...

 
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