While usually the activity the day after a three day weekend is light, today we had the highest volume first hour in the snp futures all year. This is because the futures have replaced the SPY as the place to go short and thus it is where the short covering rally can really occur and occur it did. Turning to the daily Dow you cannot see that kind of volume here. We have a low moderate volume rally off the bottom with a high end close. The average is still in a trading range and in all ways it is similar to the rally on 5/18. This was a futures short covering rally for as you can see buyers did not run out and buy stock. Having said that I must confess I do not know what it means for practical or prognostic purposes.Because Stockcharts has a 30 minute hour for its first hour instead of its last, the hourly chart underestimates how extreme the first 60 min volume was. Here you can see it is the highest in weeks. On the futures as I mentioned it is the highest in months. That every bar except for one closes on its high tells us how strong today's market was. God knows that these markets can go a long way on short covering.
Turning to the 5 minute bar chart, it would seem that traders from even before the opening, probably since their last bbq'd hot dog could not wait to buy. That buying triggered short covering and 15 million shares in 5 minutes, all closes near the top. The area surrounded by the blue quadrilateral is interesting. Every close but 2 are near the low of the bar, yet the selling is not strong enough to push prices below the low of the first bar. This is a sign of strength. Until the high, prices rally not on demand but on a lack of selling. The sellers have been demolished following their blissful weekend being short and looking forward to the bankruptcy of GM and they are in no mood for further punishment. The short side however becomes irresistible following the shortening of the thrust to 91.56. Volume picks up breaking through the last support at the small black line. The subsequent rally up fails and we are ready for the big move down. It fails at "a" and again at "b." The market is supported.
I have posted a variety of other charts for your perusal.
