Tuesday’s last-hour momentum carried through nicely into Wednesday and I’m now waiting for the OVI calculations to come through into the charts.
Tuesday’s action barely made a dent in the OVIs for all three of the main indices, but we may see it start to wake up a bit.
Having said that, one swallow doesn’t make a summer and there’s still a long way to go before we can have any sustained optimism moving forward.
My best guess is that the shorts have been sated for now and much of the action we’ve just seen is short covering.
I still maintain that medium term I think we still have major challenges that will be reflected by sustained volatility and downward price action. In the short term however, I wouldn’t be surprised to see some further upside to the last two days. As ever, trade what you see, but right now what we see isn’t that appealing … that’s fine because it only takes a few days for constructive chart patterns to manifest.
The charts will appear here when the OVI has been updated for Wednesday.
Guy