The big picture charts off the March lows in the Dow Industrials, S&P 500 and OTC Composite all show the same thing -- a downside break of all uptrendlines.
What we want you to notice are a few things:
1. The Full Stochastic on each index are deep in oversold territory, so is the RSI (relative strength). A bounce is imminent.
2. Look how far each index has ran off the march lows. Honestly, it looks like a line out of a Bon Jovi Song called Lost Highway. "I don't know where I'm going but I sure know where I've been."
How much more do you want? After such a historical run to expect more without a intermediate term correction is just plain greed. And you know what? The market knows this too. We've talked recently about how this recent bout of selling may be the first shot across the bow of a deeper, more prolonged correction. We'll find out soon enough if that is going to be the case. The way we will find out is to see what happens with a rally attempt. Should we hit some short term resistance levels as shown in the 60 minute charts below and fail? Then that will be all we need to know.
While on the subject of the lost highway, we don't need to know where we are going either, we just need to trade what we see not think hear or fear all based upon what the charts are saying. That's what's allowed us to side step the carnage and not chase over extended momentum stocks that everyone just had to have all the while the market obliged with sure we'll let you have it -- in more ways than one.
Moving on to the OTC composite
There is a good possibility that what we've just seen is the first shot across the bow. This is what the big picture charts show. But the shorter term frequency charts show the opposite -- that being watch for a bounce. It's what happens during that bounce from here on out that matters. What we saw yesterday though looks good for some sort of lift being on the way.
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Disclosure: No positions