Joshua Hayes'  Instablog

European fears remain, but rumors of the Federal Reseve moving towards quantitative easing part three brought buyers back into the market. Gold and silver jumped on the news, but both precious metals remain well off their highs. Early trading saw sellers give way to buyers as the market was fed rumors of of further easing by the Fed. It appears the only thing that will get buyers into this market is for the Federal Reserve to simply print money. Today's market wasn't too exciting with volume well below average. We again, failed to produce a follow-through for the most recent rally attempt and we continue to remain in on shaky ground.

The price gains were solid today despite the tepid volume. What we'd really like to have seen is gains well above 1.5% with volume jumping above yesterday's level AND above average. Today was day 7 of an attempted rally and while follow-through days can occur after day 7 they tend not to produce tremendous gains. In addition, this is June and June follow-through days have only once produced a viable rally. At this point in the rally attempt given Monday's action it feels highly unlikely we'll see a successful follow-through day. If we do get one we'll act accordingly, but for now a follow-through day is not likely.

The intraday swings we are experiencing continue to widen. The VIX still remains relatively low considering the move we have experienced since the start of May. It appears market participants are not THAT fearful of future volatility. Just looking at the past 5 trading days the market has swung quite a bit between the intraday high/low. While this may end up being meaningless, but increasing intraday swings without further price movement tends to be bearish for the market. If we were moving higher it would be a different story. Last Thursday and Monday's reversals are not ideal in this market and we'll need a big push above those highs to get this rally going.

Always cut those losses! Getting in is half the battle.