Sell the Rumor, Buy the News. Literally.

The market sold the Russia rumor, and bought the news.

Today was a perfect example of violent price action at major technical levels. On the S&P, that’s 4250-4300. The price action offers great lessons in using the tools I preach here.

Specifically, the combined price action between yesterday and today is what traders call a “piercing pattern”, which is very bullish. This marks a dramatic (short-term) shift in control between bulls and bears. It often amounts to a short squeeze. And it happened at major support and technical levels.

Let’s dive in with a few simple charts, and the psychology behind any big move higher.