S&P 500 up nearly 100 points from Friday's low
The US stock market has rallied nearly 5% from the panicky selloff after non-farm payrolls and now it's threatening the best closing level since the August rout.
Hindsight is an overvalued commodity but let's take a look back at two technical signs that warned a rally was coming.
1) The inability to make new lows in the first hour of trading on Friday.
Market participants were surprised by the non-farm payrolls report and stock futures fell but after the open, the market held its ground on three attempts to push lower. When it began to climb 45 minutes after the open, that was a tentative signal to buy.
2) The August low of 1867 held earlier in the week, reaffirming that it was strong support. The fall back below 1900 on Friday offered an attractive risk-reward trade with stops below 1867 hinged on good support.
3) The calendar drove excessive stock market selling in late September as hedge funds performed quarterly window dressing. There were factors helping to prompt a reversal, including quarterly rebalancing.
I know this post is a couple days too late but there's still something to learn from it for next time.
