Yesterday we saw rather extreme moves in the US indices. The day started with futures drifting lower. This was then changed into an accelerated fall that suddenly reversed in a violent fashion.

The move was very strong and occurred with good volume. This price action is important as it happened after the recent sell-off and managed to scare both longs and shorts. Let’s see what happens today, but the signal could be to cover shorts sooner than later.


We saw massive hammer candles in all US futures yesterday. These types of candles are extremely important (and rare), especially when they happen after sharp moves lower (or higher, then it is called an inverted hammer). Everybody speaks about the 200-day average, but the hammer candle yesterday is of greater importance according to us.

Surely, one candle doesn’t mean the market will be bullish again, but it is important to watch price action carefully during the coming day (s). The hammer candle needs a confirmation before a possible low is formed.

Below are charts of these hammer candles occurring in SPX, NASDAQ and Russell.

Never underestimate the power of the Hammer.