MLR - Premarket Pulse November 21, 2012
The market is currently in a three-day wedging rally attempt off the intra-day lows of last Friday that has seen volume decline each day of the rally. Today marks the potential fourth day of the rally attempt and so the market is in position to stage a potential follow-through day. However, with the Thanksgiving holiday looming tomorrow, and a half-day of trading on Friday, it is not likely that volume levels will increase appreciably, if at all. This could, however, set up a situation where relative volume over the holiday becomes very easy to surpass next week, which could set up a follow-through. We would remain somewhat skeptical about the staying power of any such follow-through given the state of the market leadership currently.
For the most part, the rally over the past three days has steemed from an extreme oversold condition after the market essentially went "parabolic" to the downside last week. Investors should remain cautious on the long side, while the short side of the market may have its second "leg" should the current rally give way. Otherwise the situation remains fluid and members should stay tuned for further developments as fresh evidence presents itself. We expect, however, that the action may remain quiet over the next two days.
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