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  • Momentum begets momentum—selling, usually, leads to further selling. Yesterday sent a loud and clear warning to bears in US stocks: there is a lot of hidden bullish conviction. The rally was, statistically speaking, the least likely outcome following Tuesday’s decline, and the message of that decline demands attention.
  • Today, expect early consolidation, perhaps extending through the day, as the market works to process recent swings. Do not fade an afternoon trend, particularly if it follows a tight early morning consolidation.