We indeed got a more narrow range day yesterday as expected. However, the trading range of the day occurred below the previous day's low rather than above it due primarily to the PPI report, which did not include the recent down turn in commodity prices. It was a day, though, where swing traders typcially liquidate short trades and start to initiate long trades.
In the above chart, you can see that the (High - Open) difference has been below 10 points for three days, which usually sees a reversal in the short-term trend. Overnight, the market has indeed traded to the upside.
One fade trade yesterday occurred at 1510 ET as the market tested the noon low. As the futures was trying to make a new low, the $TICK was climbing to higher lows. This was a good place for swing traders to start taking long positions, with both the energy and bond markets closed.
Fay apparently doesn't want to leave Floriday!
Charles
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