Notice on the SPYs there was a strong downward trend line that the index broke about 2 PM EST. Also note the triangle consolidation at the beginning of the day. This is important because the index didn't continue to move lower; instead it consolidated. Also note the rally coming out of the consolidation; it follows the 10 day SMA.
The QQQQs had a clear downtrend, but they didn't have a solid multi-day trend line like the SPYs. However, the QQQQs consolidated this morning and rallied about the same time as the other markets.
With the IWMs (Russell 2000) we have a triangle consolidation and a rounding bottom, followed by the afternoon rally.
So -- will the rally continue? A lot hinges on tomorrow's CPI report. If that number comes in hot, then traders may worry that the Fed can't lower rates any further. However, a tame number may spark more "the Fed can now lower rates" talk. So, tune in tomorrow at 7:30 AM for the CPI release.
