The Stock Indices, going into the close of last week, have conflicting signals. The inter-market divergences discussed in previous Briefings have become more intense. While the Russell and Transports appear to want to move much lower, the NASDAQ is holding them up. The internal structure of last week’s trading is also giving conflicting signals. As an example, the Indices are approaching an oversold condition without much price depreciation. Normally, this would suggest strength. However, new lows are increasing, as new highs collapse.
The key to the coming week will be to know where important support and resistance areas are. Patience will be important until one of those areas is broken and confirmed by the internals. This appears to be a market that is unsure of where value is. Until that is resolved, which could happen early in the week, use caution.
DAILY BRIEFING 200208 from Joe Mertes on Vimeo.