Day 1 Of A New Rally Attempt
Looking at the market, Wednesday marked Day 1 of a new rally attempt which means that as long as Wednesday’s lows are not breached, the earliest a possible follow-through day could emerge will be this Monday. However, if Wednesday’s lows are taken out, then the day count will be reset and the chances for a steeper correction increase markedly. It is also important to see how the major averages react to their respective 50 DMA lines. Until they all close above that important level the technical damage remaining on the charts is a concern. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is key.