Yesterday we wrote "The correction continues as we are now reaching extreme oversold conditions; a snap back rally should be expected at any time." It seemed that began today - the question is how far can it go. Tomorrow at 2 PM will be the release of the Federal Reserve meeting minutes, and traders will be watching for hints of imminent QE reduction or not within the language and one can expect a volatile afternoon session based on that assessment. As for today, the yield on 10 year Treasuries fell a bit back closer to 2.8% which helped relieve some pressure on markets. The S&P 500 gained 0.38% and the NASDAQ 0.68%. There was little in the way as of news Tuesday.
With the S&P 500, today's bounce was modest. A late day selloff pushed the index back down below its 50 day moving average as it attempted to best it earlier in the session.
The NASDAQ continues to be the better of the two indexes. We can see an area of some resistance the past 4 days at each of the day's highs. Bulls would like to see a move over that level.
The NYSE McClellan Oscillator was extremely oversold yesterday at a reading of -100; it pushed up significantly today but still is at an oversold level. A return to north of zero would be of benefit to the bulls.
While the Google's and Amazon's of the world have struggled through this correction, we are seeing good action in new leadership such as Facebook (FB) and Netflix (NFLX) - the former has been strong the past 2 sessions and today Netflix broke out even within the confines of a market correction.
Another tech company which has stood out is cloud software company Workday (WDAY) - you can see how it is has maintained a flag pattern even as the market has corrected. Of course if the market starts a new leg down from here this pattern will be difficult to maintain but thus far it has been impressive.
Outside technology we have construction/transportation/equipment maker Oshkosh (OSK) which is showing nice signs of strength relative to the market.