The anticipated countertrend rotation has occurred, and it developed in typical three steps. In the S&P, there was equality between the first and third legs. At Thursday’s low, the internals started to strengthen, suggesting a rotation up, which occurred on Friday. However, the move on Friday has some characteristics that could suggest another leg lower, making it a more complex countertrend rotation. The Briefing today outlines some short-term areas to look for in terms of trade location.
The Indices have been in a rotational pattern for eight trading days. A break to the upside with strengthening internals will increase the probability of an impulsive move higher. On the other hand, a break of Thursday’s low will possibly usher in a greater degree time and price move lower.