Tricky day, it’s the least we can say about yesterday’s action on Wall Street, why? What can be seen is a great recovery session and the unavoidable idea of buying strength in the market, might also be a perfect bear trap, seen and traded enough of them to know that usually, what is "too good to be true" is actually really not true, and the opposite is also valid, normally when everything points to a "too bad to be true" scenario, is generally not true, how many "doomsdays" were swiftly followed by bottoms areas, like 2009, or "euphoric" states of minds like the dot.com bubble were the time for Tops? What I mean is don't give too much credit to the Bulls for yesterday recovery just yet, at least not until there's some follow up of that strength.
Having said that, we shouldn't dismiss the positive action either, especially in the NASDAQ, the stronger of the bunch with the Biotech sector carrying the bulk of the buying pressure burden, it reversed a 3% drop to end with a 2.75% gain, helping the NASDAQ to recover from a 3% slide to end with a meager gain of 0.17%. The Dow Jones 30 was the worst performer, still more than halved its intraday losses from 566 to 249 points. The broader S&P 500 reached the lows of 23 months, nine of the 10 major S&P 500 sectors fell, volume was huge with around 12.5 billion shares traded, well over the usual 7.8 billion.
Two important notes to keep in mind from Wednesday, the CBOE Volatility Index climbed almost 6% to 27.59, but more significant, the amount of new 52 week lows registered on the NYSE and at the Nasdaq were the most since November 2008, just three months shy from the February of 2009, which signaled the bottom of the financial crisis crash and the beginning of the last bull market.
Oil was down again, and was responsible for a lot of the selling pressure in the stock market, with oil companies now almost an "endangered species", U.S Oil plunged more than 6% after the American Petroleum Institute announced a rise in crude inventories by 4.6 million barrels to 485.2 million barrels, the expectation was for "only" a 2.8 million surplus. Needless to say that the safe heaven pair was in heavy demand, gold rallied 1.3% to $1,101.73 an ounce while the Yen rose 0.6% to 116.92 per dollar after reaching its best level in a year
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