The gap up this morning resulted in a slow drip of selling as buyers worried about weak economic reports. But they shook off any worries and managed to close very strong. The skeptics will dismiss it as just end of the month window dressing, but it was an impressive comeback and a nice flurry of buying after a lack of early follow-through.
Volume picked up over Friday's very low levels, giving us a technical accumulation day, but it was still quite light and there was some very slow action. What really helped the bulls today was strong action in AAPL and QCOM, which have a big impact on the indices. But this was a broad rally, and it is difficult to find fault with it other than the fact that it is yet another V-shaped move.
Once again we are right back in the familiar pattern of having four straight positive days in a row after suffering a rather ugly technical breakdown. Overhead resistance did not matter, and the fact that we go straight from oversold to overbought is of little concern. Once we started running, the negatives are forgotten and entry points are secondary to adding exposure.
The bulls have the end of the month seasonality favoring them, but they also have momentum that is squeezing shorts and sucking in underinvested longs.