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At Pivot Low, Next Week Important August 19, 2017

Posted by Tom in Thoughts.
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Aug. 18, 2017 – A quick look at the price chart below shows how the NASDAQ Composite Index closed on Friday, right near the previous swing low.  We have two lower swing highs and now two lower swing lows.

That 6216 close on Friday is just a little ominous in that IF we’re expecting a turn around, it should happen on Monday.  Otherwise the next target lower is the 6141 level.  That 6141 level is where buyers have previously come into the market (we’ve already ‘blown through” the 6303 support level).  I’ve spotted in a few important Wyckoff turning points; these would indicate further market weakness.

Also in the chart above: Sentiment is bearish, as is Money Flow and Volume Flow.  We’re entering into a period of the year where the stock market is typically weak; late August through early October.  I’m not a big fan of seasonality, preferring to observe and follow the trends as they develop.

Selling also dominates the S&P 1500 index stocks.  The pie chart below shows the number (i.e. %) of them in Distribution (red / selling) and Accumulation (green / buying).  There is far more red than green right now.

A look at the sector strength table below shows a move toward more “defensive” stock sectors.  The previous market leaders of the Technology sectors have moved down in the table.  In the short term, this is a time for either hedging (via “bear funds”) or staying close to an exit plan if necessary.

I’m seeing more strength in Emerging Market countries for the time being, as well as Utilities, Telecom and other defensive sectors.  I’d wait until Monday afternoon (after the weekend investors place their sell orders) before I’d jump to any conclusions, but it sure looks like a market that’s headed lower.  At least another 3 to 5 % next week.

Have a good week.        ………. Tom ………..

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.

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