Last week, our cycle analysis identified the potential development of the latest short-term cycle low (STCL) in the stock market. On Friday, a cycle low signal was generated, confirming that a new short-term cycle is in progress.
With respect to technical analysis, the uptrend from November remains extremely overextended and a break below key support levels would signal the likely start of a potentially violent overbought correction.
This is an important short-term cycle and market behavior during the next several sessions could have a meaningful impact on the long-term health of the bull market from 2009.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.