Last Friday (blog) I eluded to the significance of the Dow and S&P 500 to remain above their respect 200-day moving averages and that I would also be looking for a reversal in the Nasdaq in order to feel extremely confident that the correction is nearing an end. Well we just may have this scenario playing out. Indeed the Dow (chart) and the S&P 500 (chart) remain trading above their 200-day moving averages and the Nasdaq (chart) today soared over 2%. S0 now what?
Personally, I still need to see a bit more market action like we saw today in order to feel comfortable in calling it a bottom. One of the reasons why I am not completely convinced is that it’s common to have “snap-back”rallies after such a sharp sell-off in the markets. Another reason is the sell-off that we had did not quite meet the 10% maxim that one would expect before a reversal, although the Nasdaq did get awfully close. Let’s see how the rest of the week plays out before any further assumptions are made.
Have a good evening.