Wednesday’s Briefing was very difficult to send out. With the price explosion we had, it seemed obvious the Indices were headed back to new highs. However, the only internal component that confirmed the price move was Breadth. Everything else was suggesting the rally was very weak and would likely be retraced. Plus, the market reached a point of being more overbought than I have seen. All of my analysis suggested the move off of last week’s low is countertrend to the move down from the highs and there is more work to the downside left to accomplish.
It does appear we will see those lows tested or taken out before any significant rally occurs. Analyzing the internal structure of any additional move lower will be very important. Once a bottom is reached, it will likely open up a tremendous buying opportunity. It will be important to watch for inter-market divergences, if and when the lows are tested. The Russell and Dow Industrials are testing the lows now.