Wednesday Market Momentum Breadth Volume
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IBD states that when a market is bottoming and beginning a new uptrend, it will start with a strong, high volume turnaround day like we had yesterday. Then the market will generally pause and consolidate for 2-3 days on light volume before making a follow-thru day. The follow-thru day is the signal to get back into the market. In other words, so far so good and now we wait for that confirmation that the new uptrend has begun. Another sign that the market is finding support is the turn up in the bullish percents for the two major exchanges as shown in the chart above.
I like the looks of this chart as well. The new lows were still too high today showing there continues to be underlying distribution taking place. But the chart above shows that all this selling has brought this indicator down to a level where it is likely to stabilize. This indicator is now at the point where it is likely to experience a little sideways up-and-down before starting a trend higher. In other words, the market is probably at the point where distribution starts to give way to accumulation.
There was lots of talk today that yesterday's rally was just short-covering and an extreme oversold dead-cat bounce. Well, it may have been, but then on the other hand that is generally how every new intermediate uptrend begins. It is also amazing how the news also brightened like the dark clouds had finally parted and the sun was shining for the first time in two weeks.
