As discussed in last Friday’s Briefing and the inter-week updates, the Stock Indices have fulfilled technical levels for a decline. They ended the week extremely oversold, which suggests some type of pause or rotation back up. The move off of today’s low was signaled by a divergence in Market Breadth. It was strengthening as price was still declining. The question now is whether the current rotation down is complete and we will see a move back up to test the highs, or if we will see a pause to work off the oversold condition before another leg down.
How any pause or countertrend move develops will be very important. I would speculate, if there is another leg down, it could be a very impulsive move. However, the probabilities are about equal that this move lower is complete and we could see rotation back up. Monday’s Briefing will be very important.