Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

It was a big day; it was a volatile day; heck, it was an epic day in the markets yesterday. Yesterday’s session warrants a closer look at the intraday action for the simple purpose of gaining perspective on the volatility.

The five-minute one-day chart of the E-mini S&P 500 futures contract shows that the peak-to-trough move yesterday was an astonishing 7.5%. That’s an 82 handle (points) move in one day! The real fireworks, however, didn’t arrive until the last trading hour when the S&P 500 futures rallied 60 points (5.4%) in 60 minutes.

So where does that leave us in the bigger picture? Not much has changed besides the beginning of a relief bounce that I’ve been waiting for. 

Looking at the daily chart of the Russell 2000 dating back to May, note a so-called “inside day” yesterday as the green bar was inside/fully covered by Monday’s long and ugly red bar. That is a bullish first sign, but as usual, bottoms are not to be trusted unless we get a confirmation day to the upside.

If we measure the sell-off from July 22 to Aug. 8, we see that a 50% retracement of the move would take us back to around the 740 level, which would also coincide with the break of the longer-term uptrend (blue line). We must reassert these levels each day, but today that looks to be a reasonable target for a relief bounce.   

The last hour of trading yesterday not only led stocks to a massive rally, but as one would expect, also led the U.S. dollar to fall. Gold also fell hard in that last hour, and on the daily chart of the SPDR Gold Trust (NYSE:GLD), we note a long tail at the top of yesterday’s candle. Should a relief rally in stocks have further legs, I would think that gold, which has gone virtually vertical the past few days, would come back down some. Aggressive traders could consider a short-term trade of long stocks and short gold. 

All of the S&P 500 sector charts look very much like the chart of the Russell 2000 above, although it is worth pointing out that the technology sector as measured by the Technology Select Sector SPDR (NYSE:XLK) put in an outstandingly solid rally yesterday, both in relation to the sell-off on Monday, as well as its intraday lows yesterday.  

Despite yesterday’s nutty rally day, the major indices remain broken beyond medium-term repair. Any relief rally here should be sold into, although quick traders might find an opportunity to play a bounce here.

• See Sam Collins’ Daily Market Outlook: Was Yesterday’s Low Really the Bottom?
• See Sam Collins’ Trade of the Day: Citi is a High-Risk Bottom-Fisher’s Dream
• See Serge Berger’s Trade of the Day: Make a Quick Buck on JPMorgan