Wednesday, January 13, 2010
Midday Briefing for January 13th
We can see how we broke below the overnight range in early trade today, but then vaulted right back into that range. In the process, we held above that key 1127 area noted earlier as support. When prices rebound that strongly from a range break, it represents a rejection of those lower prices, as buyers at a longer time frame identify those levels as representing unusual bargains. Often those returns to the lower end of the trading range will end up traversing the entire range, as shorts are caught and need to cover, adding to the upmove.
Today's move was aided by an unusual surge of volume around the 1137 resistance area noted in the morning briefing. Apparently someone was gunning for a break of that level; if the upside break is legit, we would expect now for that level to hold as support. All of this is consistent with the range bound thesis advanced this morning, as lower prices in the bull market (so far) find willing buyers.