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The large gap down form Tuesday was filled across the board today on the indexes. It will be interesting and maybe telling on how the market reacts tomorrow. If a major decline is to ensue then I would expect the market to immediately sell off after the gap fill.
The Dow 30 and Russell 2000 both rallied back right to the lower trendline of the wedge today forming an ideal backtest at this point. I don't think the market will be set up to accelerate down on a break of Tuesday's low yet. Since the S&P 500 did not break the trendline yet, we may need to see it break and back test before the stage is set for the bottom to fall out. So I think we may see some downside below this week's low followed by another brief rally attempt before a breakaway point to the downside.
Last week formed a picture perfect doji candlestick on the weekly cash Dow 30. So that is additional evidence that a significant high may be forming.
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