Was That The Soybean Bottom?

It was another wild ride on Wall Street yesterday. Stocks stumbled hard out of the gate, following the lead of most global markets. By 11:00 am EST, the DJIA was down more than 500 points, had broken below the October lows, and appeared to be heading toward the next important level on the charts - the February lows.

In fact, the S&P 500 wound up testing the closing lows of early February and April. The financials led the way lower as the action in many of the nation's largest banks was horrid. And the transports were busy exploring new lows for the cycle, causing folks to begin talking about the Dow Theory again.

Then came a small bounce, which was immediately tested with another sell program. For a change, the lows of the day held. After half an hour of sideways action, an actual rally ensued that would wind up erasing the day's losses. And by the time the closing bell rang, the major indices sported small gains. So, as I wrote last week, All's Well That Ends Well, Right?

Why The Turn?

The question of the day, of course, is, why did the market turn? Sure, stocks were very oversold and investor sentiment had become dour as just about everybody on the planet was now calling for another big drop in the stock market. Thus, the table was set for the bulls to get back in the game. But, as is usually the case, a trigger was needed to get things moving the other direction.

In this case, the "trigger" appeared to be several headlines, which when combined were enough for the programs to flip from sell to buy, for the shorts to cover, and for traders to jump in for another "ride the range" opportunity.

Although Theresa May's decision to delay the vote on the EU BREXIT deal was one of the major news stories of the day, there were a couple other items that got traders' attention.

On the positive side, there was the news the Facebook (FB ) was going to buy back $9 billion of their shares. With the stock trading nearly 37% below its July high of $217.50, the social media giant apparently believed their shares were a bargain. After all, the stock was back to where it stood in February 2017.

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Disclosure: At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none - Note that positions may change at any time.

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