In Wednesday’s Briefing I outlined the extreme overbought condition of the Stock Indices and the divergence in Market Breadth. I suggested this was a signal to anticipate some type of pause or rotation down to work off the overbought condition. Also, the Russell had peaked a few days earlier and started lower. This always suggests, at least, a possible short-term pause or change of trend.
Thursday’s trading resulted in all of the Indices turning down in what appeared to be an impulsive move. Follow through occurred on Friday but in the afternoon a battle occurred between buyers and sellers with buyers overcoming the sellers and driving price higher.
Today’s Briefing outlines areas of good trade location and intermediate support areas for Monday. While the short term is addressed, longer term support is extremely important, especially if the Russell and Dow Transports were to trade and close below those levels.