Today did not generate the action I thought we would see. Two days after an extremely rare big bottom, I was expecting to be down through the day and have a powerful rally going into the close up about 4-5% on heavy volume which would have created at least an intermediate bottom. We got the heavy volume, but we were down about 2.5%. When I first looked at it, I thought, “Not good.” Then, I updated my program. Two things stood out.
Common to all bear markets is that NOTHING works. Well, the Healthcare and Consumer Staples sectors were still technically “working” and had not bottomed. Both bottomed today.
Healthcare hadn’t bottomed in 2,268 days, since July 23, 2002.
Consumer Staples hadn’t bottomed in 2,764 days, since March 14, 2001.
Two days after a major – extremely rare – market and sector bottom, we did it again…two days later.
Based on these two factors, I feel very good about the market and where we go from here. I think the low intraday today will hold as we go further. I do not subscribe that we go straight up from here. In fact, I think we rally over the next week or so big time and then tumble right back down to the lows we saw today. The difference is that when it comes back down, I believe it will hold. It may even do this over and over, but once again, I believe the lows today will hold. Let’s see how things turn out in the future.
Chart courtesy of StockCharts.com
Here is a snapshot of my Market Data software program.
Filed under: The Market
