Short Covering

Tuesday’s sharp rally reeks of short covering.

If we can repeat today’s accumulation over the next few sessions we may begin to believe otherwise.

Rallies off lows are often sharp as short sellers scramble to get out. We give them a few days to clear out. Beginning the fourth day, which is tomorrow in this case, we look for real buyers to show up. This is what we call a Follow Through Day.

Stay tuned,

Dan

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