by Lance Roberts, Clarity Financial
In the short-term the technical backdrop of the market remains bullish, in spite of the fact that The Bear Case Is Still Valid. The market had gotten overheated over the last couple of weeks, but the correction successfully retested the 200-dma.
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Such establishes important support. Concurrently, the correction reversed most of the more extreme overbought conditions.
However, if we slow our analysis down a bit, we find that the current sell signal remains intact. Such suggests the market could still experience further corrective or consolidative actions over the next couple of weeks or months.
The short-term technical structure remains bullish and overbought currently. However, the longer-term fundamentals remain worrisome in light of the economic devastation. While the Fed’s monetary policies mitigated much of the downside risk, it can not be removed entirely.
As experienced on Thursday, “reversions happen fast.”
Be ready!
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