As discussed in the Briefing for the last two weeks, the Stock Indices continued to push higher but with an internal structure that was weak and continuing to weaken. Wednesday brought on the anticipated selloff. However, as discussed in Wednesday’s Briefing, the Indices reached a point of being extremely oversold. This suggested some type of recovery on Thursday.
In Thursday’s Briefing, I outlined some of the characteristics of a countertrend rotation that fit the selloff. Those characteristics suggested another down day on Friday was a higher probability. Additionally, I suggested, if there was another leg down, it should be about equal to the first leg. Both the QQQ and SPY achieved almost exactly the equality covered.
At Friday’s low, the Indices began to show some strength, suggesting a pause or some type of rotation higher.
The weekend Briefing outlines possible short-term strategies for the beginning of the week. The short-term development will then give us greater insight into the next intermediate degree move.
DAILY BRIEFING 210129 from Joe Mertes on Vimeo.