The bears sold off for 5 days, which is significant compared to other pullbacks since the pandemic low. The sell-off came earlier than in recent months on the cycle. We are in an 80-day cycle markdown, so it was slated to be a bit more serious.
Next week’s FOMC announcement will be important. That increases the chance of the market starting to go sideways.
We found support yesterday at the bottom of the bull channel, which is just a few points below Friday’s low.
September or October should be the high of the year and the start of 15 to 20% correction. There is a 40% chance it has already begun.
There have been many selloffs comparable to this one since the pandemic low. The bulls bought each one, and they will probably buy this one as well.
It has been strong enough so that the bulls will probably need a micro double bottom this week before they can get back to a new high.
We might get sharp acceleration up to above 4600 before a more serious correction begins, possibly after the September 22 FOMC meeting. If so, that would probably be a blow-off top.
Yesterday’s low is now the key line in the sand. Consumer inflation came in slightly below expectations this morning, but still high by recent standards.
We are watching developments in China vis a vis Taiwan closely.
A.F. Thornton