On whipsaw price action, stocks rallied strongly after early session selling, to close near the highs of the day. The day began with the market gapping higher followed by sharp selling in the first half hour of trade. However, stocks recovered quickly and rallied virtually the entire day and surged into the close. All five major indices closed well in the black with high beta issues leading the charge. By the closing bell the small-cap Russell 2000, S&P MidCap 400 and the Nasdaq were up 2.5%, 2.4% and 2.2% respectively. The S&P 500 tacked on 1.9% while the Dow Jones Industrial Average finished 1.8% higher.

Market internals were bullish on Thursday. Volume increased on the Nasdaq by 9.2% and on the NYSE by 10.4%. Further, advancing volume outperformed declining volume by a factor of 5.5 to 1 on the NYSE and 3.5 to 1 on the Nasdaq. The higher volume and strong price action into the close suggest that institutions were actively buying. Thursday was a clear accumulation day on Wall Street.

Our watchlist candidate, PPH, hit its trigger price yesterday and we entered the trade. PPH performed well yesterday and by the close we were up about 0.7%. Via an intraday alert we also entered a long position in the SPDR S&P Retail ETF (XRT). We liked the trade because XRT had formed a reversal candle on Wednesday after early session selling pressure. XRT offered a reasonable risk/reward entry just above Wednesday's high. Trade details are available to our members in the open positions section of the newsletter.



The First Trust Consumer Discretionary AlpaDEX ETF (FXD) appears ready for another move higher. Since losing support of its 200-day MA on November 1st, FXD has undercut and tested support of its 20-day EMA twice but both times managed to rally and close near session highs. A volume assisted move back above yesterday's high of $20.59 could provide a buying opportunity in this ETF.



The market continues to demonstrate resiliency. In the face of overwhelmingly negative news it continues to consolidate near the highs of this recent run. Nonetheless, as stated in yesterday's newsletter, we must remain keenly aware that a significant number of distribution days have occurred over the past two weeks and it would only take two or three more days of distribution over the next two weeks to put the current rally in jeopardy.

Deron Wagner is the Founder and Head Trader of both Morpheus Capital LP, a U.S. hedge fund, and MorpheusTrading.com, a trader education firm.