Let’s review some key things that have happened.
First, we need to focus on 3425. This level was resistance in Labor Day week and remained a painful barrier for the next month – especially on October 6 when doubts about fiscal stimulus increased.
The good news for the bulls is that 3425 was almost exactly the close on Monday. Old resistance seems to be new support.
Second, October 19’s decline produced a big red candle. Tuesday’s and Wednesday’s bounces above could be the start of a “kicker” pattern. That’s when the bears score an initial victory, only to get defeated later by the bulls.
Monday’s selloff was also the biggest percentage drop since September 23. (That candle was followed by a kicker of its own -- and 10 percent rally.)
Finally, current price action is interesting because the Nasdaq and growth stocks are coming back to life as hit. This is potentially because it shows that investors returning to favored leadership areas.
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