“Market Ready To Take Breather In Anticipation Of Next Leg Up?”

“Market Ready To Take Breather In Anticipation Of Next Leg Up?”

[vc_row][vc_column][vc_column_text]The equity market has come as close to a V bottom as I have ever seen. What is interesting is that as strong a run as we’ve had since Christmas, the descent was still steeper and swifter than the relief rally. Chart of the S&P 500 below shows that stocks normally take the escalator up and the elevator down. The key question is when is the next elevator arriving? 

I believe we have entered a consolidation period that could last a couple of weeks? I imagine most shorts have covered their positions and some could be reloading at these levels. With just about all indices/sectors portraying this similar pattern, swing trades may be difficult to come by for a bit as these consolidations are often narrow in scope. A quick retest of the lows would not be good for the short-intermediate term in my estimation. 

I do see the seeds of a longer term Head and Shoulders forming that could put the nail in the coffin for this 10 year Bull. The left shoulder was formed a year ago in the January melt up, the head was Sep’s grinding high and the left shoulder due date is late spring early summer. Just in time for Sell in May and Go Away. 

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”827″ alignment=”center”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Going to keep it short this evening. Could be a ho hum week, unless some news enters the fray (rarely short of that with this administration). China talks are not until first week of Feb, and I do not believe the end of the gov’t shutdown is enough to fuel the next leg up by itself? But you never know in this biz.

Final Thought –
“Courage is what it takes to stand up and speak, it is also what it takes to sit down and listen”  – Winston Churchill

 More later,
Max Power

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Disclaimer: Remember everything I said could be wrong, the market always has the last word.


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