The SP500 has reaffirmed the prior wedge break market timing signal assuming that the failed breakout holds into the close today. Can the market just saunter back up in the face of retail disappointment (Ford and Amazon) and the Egypt situation? It seems unlikely.
The only way the wedge break was going to be reversed was to have a strong breakout above the high point of the wedge. We did not get it. Not enough strength to call a victory anyway.
I mentioned yesterday that 2 days above a breakout point, especially with such a weak breakout of just a few points, is not enough to declare a Bullish resolution of the upward Bearish wedge we saw in the chart. If the close is clearly below the top of the wedge, there will likely be more downside for days to weeks. The market has been reluctant to correct. This may be the time it finally gives back some gains whether it’s a 2-3 day rout, an intermediate term pullback or something more serious.
Regardless of the extent of the current pullbakc, the targets I presented on Monday in my FREE SP500Tracker™ newsletter are now in play. And you can read this past Monday’s issue now by subscribing using the link below.
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