Sept 18 INDEX UPDATE
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In light of yesterdays strong sell-off, and strong oversold region, I am expecting some sort of a short-term rally. However, I do not expect the forthcoming short-term rally to be strong. It may only be just a 2-3 day affair or even a one day/intraday thingy.
Yesterday I did go long both stocks and mutual fund(UOPIX=long-NDX), but for non-technical reasons, since the NAZ/NDX are still in pending NEGATE CLASS 1 SIGNAL territory. So if the market does continue to rally from todays open, I will be closing/hedging my longs once/if my short-term technicals get to the midrange.
One issue that many, especially the analysts forget/decide not to mention is that in a downtrend the chances of a retest of the recent lows after a rally is good. As mentioned in the past often, I did an analysis that covered 30 years back to 1970, a few years ago. The conclusion I came up with was that for declines of greater than 7%, the probability of a retest was very high. The timeframe for such retest could vary from a few days to months. For those who are totally ignoring this analysis, just remember back the rally into MAY after the APRIL LOWs, where many/analysts felt very strongly that there would be no retest, and some of them were extremely adamant. Having said that, nothing in the market is 100%, just that the chances of a retest after a rally has high probability.
Retests can set lower lows, but unless the lower low is less than 7%, then it just may be a successful retest, whereby a strong rally could follow.
In light of season issues/strong oversold technicals, I am suspecting that the market rallys into next week, with the possible retest starting near the week of SEPT 24. Whether the rally started already, Im not sure - need to see how today closes. Also want to add that this forthcoming short-term rally into next week may not be obvious, but could take the form of a few oscillations with a slight incline overall.
So watch out for the possible retest, which could be violent and even set lower lows. But once that is over, I an suspecting some sort of a significant rebound which could be FIBONACCI in nature. |
