Today looked positive because it rallied late in the day to close well off the lows and above the middle of the range. And, buyers did step in. However, I don’t see this as strength.
Tomorrow is the last day of the month, and so we may see the market try to hold as fund managers look to chalk up a good month for the beginning of the year. We’ll see if they can do that. They may not be able to.
During the past week in Deep Practice, we have been discussing the market in detail, the evidence of weakening demand, and the clear signs we would be looking for to see the market begin to pull back. It started late last week, and the Deep Practice members were well-prepared.
The market has now closed down three days in a row and has broken the narrow uptrend line. In the previous reactions, the market had gone sideways and not given up much ground. Not true here. I am expecting further downside over the next few days.
For tomorrow, watch the trading around today’s high. If it can’t rally up above this level and hold, the market may start to head lower. Ultimately, we can see a pullback into the 1283 level and perhaps down to the 1265 level.
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