Wednesday January 23, 2019
We suggested stocks would encounter resistance half way back to the October 3 high. That is exactly what happened Tuesday. This suggests the 10% rally from the Dec 24 low as in fact a bear market rally, vigorous but prone to end quickly. Note the DJIA stopped right at the uptrend line. MAs are converging which is always a prelude to a change in trend.
Volatility
volatility jumped right at support, a whopping 16%. And PMO is bottoming, again this looks like a resumption of the downtrend.
Hedge A Bear Fund
This is a perfect set up for a long entry and it is a bear market fund, one that advances as the averages decline. Note higher highs and higher lows, the sign of an advancing market.
Bullish Percent tops just under 40%
And here we have lower lows and lower highs, the opposite of HEDGE, looks like the ten year bull is ending.
Short TermView
On the other hand, the one hour chart back to the December low looks more like a correction, note the late rally of 150 points into the lose.
Bottom line the jury is still out on correction versus bear market.
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