Stocks Correction Gathering Momentum But Short Term Rally Likely
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https://seekingalpha.com/article/4710469-stocks-correction-gathering-momentum-but-short-term-rally-likely
The analysis in my recent article anticipating a substantial correction for US stocks has been borne out by last week's sharp decline and the attendant significant break of technical support on many charts. While I continue to expect this to be the early stages of a 17% decline in the SPX 500, I also anticipate a capitulation sell wave that will put in a short term bottom sometime this coming week. There should be a strong countertrend rally that fools many into thinking that the worst is over, forces early bears to cover and sucks in long money off the sideline. But after that "bear market rally" exhausts itself, the real selling should then begin.
In this report, we'll take a look at the monthly and weekly charts to frame the bigger context of this intermediate term corrective movement, but we'll also see how the shorter term daily charts are set up for a rally sometime soon…
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Well, as I said above, it could all come on Monday. Here's a look at the futures charts...
The lower rails have been well pierced. While some additional downside follow through could be seen at the open, this likely marks a short term capitulation. The Dow might even end the day in the green after the algos go to work. IF on the other hand there is no turnaround snapback rally, then we may have a legitimate crash scenario playing out.
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