Internal Divergences Signal The Turn Lower

As I have discussed in the Briefings for over a week, the intermarket and internal divergences predicted a higher probability of some type of rotation down. The Transports and Russell have led the way, with the S&P and NASDAQ just now getting on board. While today’s trading suggests the possibility of a short-term pause, it does not preclude a continuation of selling on Monday. If there is a lower low and breadth is strengthening, look for a bottom and rotation up. If there is a lower low and breadth is at least as weak as today, expect price to accelerate.

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