With February upon us, we have to wonder how much farther the market will fall. The S&P 500 is right at the trend line support levels and the MACD is reaching extreme, negative levels.
One characteristic that has got me wondering if the rally isn’t over for good is the size of this correction. Currently, we are down over 6.5% from the top. The last two pullbacks were only 5.6% and 4.3%.
The trend is definitely bearish as each regression is getting larger. Moreover, the volume has been much more bearish this time over as we see large spikes on the down-days and a drop-off on the up-days.
On a weekly basis, the damage looks less severe. Volume was lower in the second week of the pullback but both weeks finished on the lows.
Overall, this next week will be critical. If the market can’t hold at support, we could see quite a drop. I expect to see a pop that fails to make new highs and provides us an excellent point to short. Keep your eyes open and sell good news.
You also might enjoy:
About Author
