The standard-issue “I look at price only technician was likely watching Friday’s price action across the major indexes and was excited for multiple breakouts about short term downtrend lines. These breakouts were confirmed by each of the indexes, including the DJIA, SPX, NASDAQ Comp., and the Russell 2000. Still, I have a queasy feeling in my stomach that the market still deserves one more whack to the downside before we can hammer out a sustainable bottom.
Here are the recent trendline breakouts I’ve been mentioning. Click the chart to enlarge.
But, my friends, what is going on under the surface? Despite the breakouts, it appears buyers remain on the sidelines. Take a look at my proprietary indicator below, which measures short term money flow, versus the S & P 500 Index.
Now granted, the indicator is only 9 points above an oversold level, just around 40, so a final selloff could accomplish this. For now, however, it still feels too early to buy the dip, no matter the positive “feelings” regarding the market over the last several days. Careful friends.