S&P 500 futures came roaring back from a six-day losing streak yesterday for a 1.2% gain, continuing the upward push from Tuesday’s aggressive dip-buying. The /ES at one point on Feb. 23 saw a viciously fast 1.8% plunge from Monday’s close before an equally swift rally brought the contract back to practically unchanged, and it’s now up more than 3% from there.
The past two days also saw heavy trading with a volume spike on Tuesday, defined as volume at least 50% above its own 50-day moving average. This is noteworthy because high volume on a strong push upward suggests greater conviction on the part of the bulls. Also noteworthy is that the /ES fell below its 21-day Exponential Moving Average but recovered to close above it once more.
Finally, even if you may feel the market is stretched thin to the upside, consider that the /ES also sits right near its yearly Linear Regression Line around 3925, suggesting that prices are in line with some notion of fair value. After all, just because prices are high, it doesn’t mean they can’t go higher (and vice-versa). Look for a strong close above 3960 for continued upside, and watch for support near the 64-day EMA around 3763.
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