June 1, 2006 Stock Market Recap

I sure didn’t see this impressive bounce coming after Tuesday’s action. (I’m glad I waited for confirmation on all those ‘obvious’ short setups.) The bulls came roaring back the last two days and have actually been able to push the market above last Friday’s highs. So all of a sudden the market’s looking a lot more constructive with a series of higher-highs and higher-lows in place.

I still have a complaint about the volume action though. Most of today felt like a slow motion rally to me. The market spent a good portion of the day drifting sideways. Maybe that sideways action is responsible for the fact that volume was less than yesterday. Given that the price gains were greater than yesterday I would have expected volume to be greater as well. I don’t want to discount the price action too much but the volume on most of the up days isn’t impressive.

Now the test will be to see whether the bulls can break the intermediate term downtrends. The indices are still below their 50-day moving averages and bears will argue that this rally is nothing but a normal retracement of May’s declines.

The only change to the trend table is on the Nasdaq’s short-term trend which is now up.