Equities rally into open again

Good day! The market rallied on Tuesday morning mimicking Monday's action. It took until the early-morning hours, however, for the market to rest long enough following Monday morning to launch a successful bid for new highs. This kicked off that additional momentum play I wrote about in "Tuesday's Outlook" in yesterday's column and the follow-through was right in line with expectations for that type of setup.

The rally took off in earnest following the 9:45 ET correction period and continued until approximately 11:30 ET. At that point the indexes had struck equal move resistance compared to the rally from the previous session. This is shown in blue in the figures below.

Dow Jones Industrial Average



Additional resistance also curtailed further advances at that time, as did the time of day. Typically, a strong rally that holds above the 5 minute 20 sma throughout the morning will correct mid-day with at least a trading range throughout the lunch period. This time the market corrected with a two-wave pullback into 14:00 ET, but the pace and volume still favored the bulls. The market struggled to regain strength in the afternoon, however, since the mid-day correction was relatively brief compared to the once which took place the previous afternoon and afterhours. Instead, the risk was high that it would merely trap aggressive bulls hoping for another similar run.

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