Last Monday, I posted that the Dow was lagging the other markets and was comparatively weak. This often flags a trend change, though it can take a short while to unfold. I mentioned to watch for weakness in the Nasdaq, looking for the Naz to break support. Well, that didn’t happen, but on Friday, the Naz failed to make a new high along with the other markets (see red arrow).
On that day and again today, weakness came into the S&Ps. This is designated by the ‘S’ labels on the chart. We see from both weekly and daily charts we are overbought. Given the comparative weakness in the Dow, non-confirmation in the Naz, being overbought, and evidence of supply entering the market, we should be expecting a reaction.
I would expect the reaction to at least run to the 1846 level and perhaps lower.
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