As discussed in the weekend Briefing, today and tomorrow are proving to be extremely important in the short-term analysis. The lower probability now is for an immediate decline to test the recent lows. The higher probability is today’s rally is the third leg of a countertrend rotation. However, the Indices were extremely overbought at the close today. Therefore, how price develops tomorrow will be important.
If there is a rotation down and today’s low holds, it suggests a pause that will lead to another leg higher. If volume increases on any move below today’s low, we could see the beginning of another leg down. Today’s low is extremely important support.
Market breadth was very strong today but volume was extremely weak. That is not the ingredients of an impulsive move. While that can change, use caution. Tomorrow will likely give us more important information.
DAILY BRIEFING 200406 from Joe Mertes on Vimeo.