Stock Market Analysis

Wednesday, August 23, 2017

Dow Ends Short Correction

Exactly as I have predicted in yesterday's report for paid subscribers, the Dow rebounded on its inverted hammer candle and made its strongest single day rally since April 2017! Here was what I said:

"..opposite to the inverse hammer candle, this is actually a bullish reversal candle and when it occurs in a short term oversold position, usually marks the bottom of a short term or intermediate correction."

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Supporting the move was bond yields moving upwards as investors exit the safety of bonds and returned to equities. However, interest behind yesterday's rally seemed to be rather weak as total equities put call ratio remained in the uncertain zone rather than the call options zone like really bullish days are and how volume continues to decline into the rally.

As such, I do suspect that this isn't where the Dow simply go straight up and challenge the 22K level again. With such a strong single day rally and weak support from traders, I won't be surprised to see some profit taking Wednesday followed by some struggle around the Dow's 30MA for a few more days before it can muster enough energy to stage a real breakout. 

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For now, the market turns a short term and intermediate neutral trend within a primary bull trend. 

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