TUESDAY:
Monday was not the session that told us much about the ultimate resolution of this test, but it did pull things back together for at least another attempt after a questionable end to last week. That did not look like the bottom being formed and we still expect another test, but if upside volume starts to churn in at levels at or better than Friday, then we have to take notice that it could be done selling. A long shot, but you have to keep open to the possibilities if they show up.
Tuesday we see some more pricing data with the PPI, and if it is much higher than expected that could rattle this low volume bounce. The real news is Wednesday with the CPI, but the PPI is part of the pricing equation.
Even with the weakness to end last week we still saw many stocks holding up in nice patterns and breakout tests, and the Monday action did not change that. Some broke higher, many more continued working on their patterns. Without a lot of breakdowns in leadership, the consolidation continues in decent shape. The key test is on, well, another test of the April lows. The stocks that survive that test will be the toughest in the crowd as their owners won't let them go. When the test is over they will be moving higher.
With volume so low Monday, it won't be hard to top that trade and give an exaggerated sense of upside strength on any further bounce higher. That is way we want to see that volume exceed last Friday to show some real strength. While we watch the overall volume we will take advantage of those leaders n the report that have held up and show us the solid moves that provide good entry points. |
