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The evidence has been and continues to be suggestive of the January 20th low having marked the trading and intermediate-term cycle low.
While we have expected more of a bounce out of the January low, so far, the market has proven to be weaker than anticipated. As of Thursday’s close, the Industrials are still holding above their January low. But, with the violation of the January lows seen by the S&P 500, the Nasdaq, the Russell, the Wilshire 5000, the Hang Seng, the DAX, the CAC, the FTSE and the Dow Jones World Index, every indication is that the intermediate-term advance has faded sooner rather than later.
As I’m reading the overall setup, I feel that it would be more negative for the market if it could muster up a bounce, prior to a violation of the January low by the Industrials, for that bounce to retest the February highs, fail and then roll over. That is what may have started today.
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Livio S. Nespoli has been a broker, registered investment advisor, and financial publisher since 1985.