We would view today as the 4th day of a rally attempt off the lows of four days ago. Since the NASDAQ closed above the mid-bar range on Thursday last week, that would qualify at as a first-day rally attempt. Currently the NASDAQ is trading up 1.68% on heavier volume vs. yesterday.
Given the potential for a follow-through today, short-sellers should maintain careful stops on short positions and look to move back into cash if and as the market shows continued strength. Our general rule is to cover all shorts in the event of a follow-through, but at the very least one should adhere to their stops based on their own risk tolerance.
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