Despite Wednesday’s key reversal, the consistent inside days posted by the market, consolidating the most recent break below longer term support is flashing a big warning sign for traders.
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After a classic gap fade, Mr. Market let the bulls take their best shot and it was quite a shot. Led by financial stocks, the markets erased much of Tuesdays blood bath and may be poised for further upside.
After breaking significant support, the bulls managed to step in and buy ahead of Friday’s expiration while shorts looked to book gains ahead of Tuesday’s inauguration. Unfortunately, the chart’s don’t offer up much clarity other than the fact that we’ve bounced within a broken pattern.
With the technical conditions already eroding, the retail sales data released Wednesday added fuel to the bearish fire. Stocks were slammed and November lows are now in clear view.
The argument surrounding rallies on bad news lost its luster on Friday when an in-line jobs number sparked a high volume sell off. Bears look to be in control and charts suggest further downside. Click above to see today’s FREE A/V
