Especially following a narrow range day, if the market makes a large swing wave, you can usually expect an impulse wave of the same magnitude to follow. Yesterday we got exactly that following a lunchtime consolidation period.
The lunchtime correction or consolidation period was rather shallow, which indicated that there was very little interest in creating long positions. Typically when the market wants to move in a big way during the afternoon session, it will start to move during the 1220 - 1250 ET time frame. Notice how the $TICK was making long tails to the downside between +400 and +200 during this period.
Interestingly, the VIX still shows little panic.
Merrill Lunch not doing well!
Charles
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