The stock market gave up little ground since last week's signal for a pause/pullback and is now hinting of a possible short term low with a set-up for a rally. For the medium term, I'm uncertain if the stock market will continue to grind higher from current levels or that it'll content with consolidating and eventually sooner rather then later the need to retest it's 200 day moving average. In most cases, the major indexes will retest their 200dma within 12 months. It has been almost 7 months since they last touched their 200dma. So the uncertainty is will the major indexes continue higher for several more months and then crash back down (like beginning of May last year because of the 'flash crash' when it finally retested their 200dma after 10+ months.) Or the stock market will get over it by moving back lower (over +5%) and retest by summer time and then power back up afterward.
The chart below is the Nasdaq and will likely retest the 50dma (blue line) and because of short term oversold should get a short term rally. The red line is the 200dma and the uncertainty for the medium term is whether the stock market will retest it soon rather then later.
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