When a financial instrument or Index is unsure of whether value is higher or lower, they pause. Often times, it is those pauses that give us the best indication of the next greater degree move. As of today, except for the NASDAQ, the Indices are paused and testing the lower extreme of that rotation. While the trading range is large and tech is on fire, the majority of the Market is in rotation.
As of the close on Friday, the structure of each move supports lower prices, not higher. However, that can change. The key to the next greater degree move will be breaking last week’s lows early in the coming week. If that does not happen, then the probabilities will change in favor of another rotation through the range and a test of the upper extreme.
The Russell and Transports have signaled weakness in the past before the other Indices. They are showing more weakness now. Watch them carefully. If they begin to break down, the other Indices will follow.