As discussed in the Daily Briefings, the Stock Indices have been in an area of rotation since the beginning of September. Tuesday and Wednesday saw a pause at the upper extreme and then a break to the downside, suggesting another rotation down to test the lower extreme. That is exactly what occurred.

However, The S&P and NASDAQ have both broken lower support. The other Indices are showing weakness also. Friday afternoon they retested their breakout points, which is typical. This means Monday’s trading is critical. If upper resistance or the breakout points hold, then the Indices are transitioning into a greater degree of time and price lower. If they trade above and hold above the breakout point, we can likely expect rotation back through the range and Friday’s breakout was false.

The Indices are not quite extremely oversold. This would allow for an additional move lower. However, if Breadth is not weakening below Friday, expect some type of rotation back up. Any move lower should be followed by the market internals confirming the move. If not, expect a rotation higher.

DAILY BRIEFING 200919 from Joe Mertes on Vimeo.