Yesterday I told you that follow through would be key. The markets failed to follow through. They were up in the morning, then around mid-day then turned around, sold off, and ended up down.

Down volume was 55% on the NYSE and 60% on the NASDAQ, both on light volume below their 30 Day Moving Average. All of the markets are moving above key support levels right into Overhead Supply. This is why we need a strong, triple digit day to break through.

Therefore, today would be especially key for the markets to be able to bounce off this recent 2 month pullback and key support levels, and resume the rally. Today, thus far, we are getting it (I have attached an S&P graph to illustrate this for those of you who like to study technical analysis).

The markets are all up between 1 1/2% to 2%, and the DOW is currently well into the triple digits up just at 200 points to 10,098. Slightly better than expected jobs numbers came out in the US and very positive trade growth in China are labeled as the culprits.

Personally, I do not believe the jobs data was all that positive when you read between the lines, but the China news was positive. In any event, it worked and that is all that counts.

More good news is that buying strength is increasing and selling pressure is dissipating. I still have some cash on the sidelines, but will not chase the market into the close. I would like to see the open indications tomorrow and see another positive day before I put additional capital to work.

This is not about guessing the bottom, it is about managing the risk. Our economic data and Asia's economic date are good, it is Europe that is the wildcard, and we are not out of the woods just yet. These are my thoughts for the day.

Keep studying,
Dan Stewart CFA®