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Thursday, March 7, 2019

Daily update 3/7

Downside follow through.

SPX closed below the 20 and 200 DMAs.  Breadth was -67%.  New highs were actually up a bit to 72.  New lows were up a lot to 51.  Will the dip buyers come in to support the 200?

The futures confirmed a break of the 50 SMA.  That means we need to see an upside confirmed break of the 50 to get back into bull mode.  A bounce back to the 50 from around this area would not be surprising.

The red count is approaching the oversold level, but is not there yet.  The day that the red count gets this high after a long rally is generally not the low point of the pullback.  That does not mean the market is going to collapse necessarily.  There is likely to be a lower low at some point though in the days ahead. 

With SPX at the 200 DMA a bounce would not be surprising.  If that happens we will have to look at the strength of it.  I don't think another test of the recent high is out of the question.  Because of the magnitude of the rally I still believe there will be more profit taking to come.


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