BROAD STOCK MARKET TRADE ALERT (2:30 pm EDST)
The DOW made a new weekly low early this morning while the S&P 500 and NASDAQ did not, and all three indices are now rallying strongly. This is starting the week off with a strong intermarket bullish divergence signal. Although today is not technically within a reversal zone, we are sandwiched right between two reversal zones (Feb. 26 - March 7 and March 12 - 21), and that can also be a significant turning point in markets. In other words, this sub-cycle correction may be over. Curiously, directional momentum in the DOW has now turned nearly 100% bearish while momentum in the S&P 500 and NASDAQ is almost 100% bullish. These mixed signals are keeping alive the possibility of this market still continuing down into late this week or even next week (i.e the March 12 - 21 reversal zone), but today's bullish divergence signal and strong rally are making that scenario seem less likely. I am going to cover my short position in this market today while we still have a profit. Yes, if this market does go back down we will miss that extra profit, but remember that we also want to buy at the bottom of this sub-cycle correction so we will soon be back in the market (long). Because the DOW seems less bullish than the other two indices, it's possible it could continue lower into the end of this week (or even into next week) while the S&P 500 and/or NASDAQ remain above their lows from last week. If that happens, the DOW would be a good index to buy at the bottom of this sub-cycle correction. Taking profits and covering (unloading) my short position in the broad stock market today.
The DOW made a new weekly low early this morning while the S&P 500 and NASDAQ did not, and all three indices are now rallying strongly. This is starting the week off with a strong intermarket bullish divergence signal. Although today is not technically within a reversal zone, we are sandwiched right between two reversal zones (Feb. 26 - March 7 and March 12 - 21), and that can also be a significant turning point in markets. In other words, this sub-cycle correction may be over. Curiously, directional momentum in the DOW has now turned nearly 100% bearish while momentum in the S&P 500 and NASDAQ is almost 100% bullish. These mixed signals are keeping alive the possibility of this market still continuing down into late this week or even next week (i.e the March 12 - 21 reversal zone), but today's bullish divergence signal and strong rally are making that scenario seem less likely. I am going to cover my short position in this market today while we still have a profit. Yes, if this market does go back down we will miss that extra profit, but remember that we also want to buy at the bottom of this sub-cycle correction so we will soon be back in the market (long). Because the DOW seems less bullish than the other two indices, it's possible it could continue lower into the end of this week (or even into next week) while the S&P 500 and/or NASDAQ remain above their lows from last week. If that happens, the DOW would be a good index to buy at the bottom of this sub-cycle correction. Taking profits and covering (unloading) my short position in the broad stock market today.
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