A plus 4 NYAD day pushed the DOW up 236 points. Just 2 questions>> how much of today's action was short covering and, more importantly, will it hold?. The top chart is today's 3 minute bars of the SPY's pop above R3 showing that the Ergodics and the ADX were nicely in sync suggesting the HFT programs were in fact providing liquidity rather than trading against it as yesterday's chart indicated.
The lower chart is the 2 hour bar chart of the SPY showing what's happened on 2 previous occasions (yellow arrows) when we've experienced dramatic recovery moves such as today. Also note the similar Ergodic/ADX divergence at the yellow arrow reversals. Just something to keep in mind especially when considering that June is historically the worst performing month of the year and the Friday is coming up fast...so if we,re going to see a Trap Door or something similar then the best odds for such an event are Friday.