to define the April 1219 top, but very few could define the July 1 - 1010 S&P bottom? April 26 to July 1, the S&P dropped 17.2%. Since July 1, the S&P has risen 11% as of today's intraday high. Actually to go from the July 1 low, back to the April 26 high, the S&P has to go up over 20%. Either way, that translates into big money for the 2X and 3X funds going down from April and up from July, yet the shorts have been struggling with intraday moves, frightened of the long term view (I'm one) while the long 3X funds have been racking up 30-45% gains if held since July 1? Please, what are we missing besides the obvious?
I'll take a stab at this. I think that the misinterpretation of the downside, has been due to a misinterpretation of the H&S RS. Many people thought that the June peak was the RS, but it turned out not to be. People who believed it was the RS didn't expect the reversal in July. Given the low volume of July's rally, and the suspicious nature of the action (i.e. lots of large AH gap ups on weak economic news), it is hard to see how it can be sustained. So no one trusts the upward trend. I know I don't trust it. It feels like watching a game of Jenga. Yet the rally continues.
Last year's rally was basically an extended low volume melt up. July's rally is an even steeper, yet lower volume melt up. Whether or not that is due to artificial market support or legitimate strategic trade is probably debatable. In either case, the technical momentum is still a reflection of the trade activity.
We're officially back in bullish technical territory, but I still have no faith in the rally.