The market opened down, recovered quickly into a sideways move that lasted most of the day, but it slipped badly into the close. The 10-minute bar charts give the story.
We expected some continuation of the pullback from overhead resistance presented by the short-term declining tops line and the 200-EMA, but we are also at a point where we need to see some firming, not increasing weakness.
Looking at the daily chart, we can see a descending wedge within a descending wedge. As I often emphasize, the descending wedge is bullish and is very reliable in that it normally resolves to the upside, so naturally I am expecting an upside breakout in this case. I should also emphasize that the pattern is not "bet-the-farm" reliable.
Bottom Line: The market is still medium-term oversold, but it continues to show weakness instead of rebounding. This really concerns me.
SIGNALS: All the major market indexes and sectors we track are currently medium-term neutral.
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Technical analysis is a windsock, not a crystal ball.
