Stock Indices Show Small Internal Divergences

Small divergences in the downtrend are beginning to develop. Also, I have learned to respect buying tails that occurred in today’s trading. While none of this gives a high probability of the move lower being complete, they are small clues that some form of bottom may be approached in the next few days. Additionally, if this is a countertrend rotation in a larger degree of time and price, it would project complete in or around the 259.00 area in the SPY.

The small divergences suggest some strengthening. This along with some intermarket divergences and an oversold market would project some type of rally the first of the week. This is assuming there is no negative news prior to Monday’s open. If there is, those divergences will be eliminated very quickly. How any rally develops will be important in determining if it is countertrend to the move off the highs or if it is the beginning of a trend change.

Going into the beginning of next week, I have to be leaning more to the downside of the market but with much caution. If and when a bottom is found, it should open a good buying opportunity.

DAILY BRIEFING 181026 from Joe Mertes on Vimeo.

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