The link to today’s Briefing is below. From a price development perspective a lot of damage was done today in the Stock Indices. The S&P has broken down below 2065. The Transports closed below 8250. The Industrials appear to be breaking down outside of their rotation. The NASDAQ closed below its lower support. Most important, the structure of the move was strong internally. The day patterns suggest additional selling tomorrow. However, the Indices reached a point of being extremely oversold today, where we can typically expect some type of rotation to work off the oversold condition.
The Indices can stay oversold for a long time and selling can certainly persist tomorrow, but we must be aware markets never move in a straight line. Therefore, I have to expect some type of rotation up. How that rotation develops will be extremely important. Also, holding the S&P below 2065 and the Transports below 8250 will be critical. If they do hold below those levels on any rotation, it will suggest we have are transitioning into a greater degree timeframe move lower. If there is a break above those levels and close above those levels, the probabilities will have switched to today’s move being a false breakout.
As I said in the previous Briefing, expect volatility this week. That is certainly what we were faced with today.