After getting crushed for a month, the U.S. markets came to live last week.
On the the week, the Dow industrials put on 114.32pts, 1.57%, to 9,325.01, the S&P 500 rose 14.66 pts,1.54%, 968.75, and the NAS rallied 22.43pts,1.32%, to 1,720.9 .
The Big Q: has the up turn marked a early sign of a market recovery or does it represents a consolidation before the next leg lower.
The Big A: Time will tell.
When we measure the upturn’s power, the following is a checklist in determining a MML (major market low).
Most of the following below have to happen:
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An off-the-charts strong-volume rally that is not driven by government intervention.
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The emergence of sector leadership. Along with the financials, the airlines are well, but these groups cannot do it alone, the techs have to really join the party.
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At least one, and preferably two, 20-to-1 up days to neutralize the October breakdown. Over the past many sessions, the U.S. markets have suffered three 20-to-1 down days from the breadth POV.
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A volatility drop to digest the market crash. For instance, a series of 100-point Dow moves, in either direction, uninterrupted by these 800-point intraday whipsaws.
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From a sentiment standpoint, analysts need to stop declaring how great this buying opportunity is. This is a must
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A decisive break through overhead resistance.
That is it from the Technical POV.
Now, when considering the final point, a break through over overhead resistance, see the following areas:
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Dow resistance at 9,387, matching the two week prior closing high.
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NAS resistance initially at 1,844, matching two week prior closing high, followed by the 1,900.
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S&P 500 resistance spanning from 1,000 to 1,010, two week prior closing high held at 1,003.
From a technical standpoint, anything transpiring under these levels is little more than “noise.”, and as these areas are approached, the risk of another sharp downturn increases.
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