The market tested the first wave of support to start the week as Biotech and Momentum stocks continued their pullback and weighed on the indexes. There was a slight rebound on Tuesday that lasted into Wednesday’s open which teased us (but not Wall Street) a breakout to new highs was on the horizon. However, out of nowhere, the bears struck quickly as the Dow closed nearly 200 points off its high.
There was continued selling pressure on Thursday as the bears cracked the next waves of support but we mentioned the bulls did well by keeping the losses in check and holding down the 100-day MA’s (moving averages) on the rebound. Friday’s action started off extremely strong but the trading pattern of another late fade also played out. While the talking heads and slick talking pros continued their pounding of the table for a continued lower market, we said to stay strong as nothing was broken.
It may have been our best “call” of the year as word quickly spread after the market closed that Putin called Obama. (continued…)