Here's a link to this morning's Relative Strength Wednesday trading meeting, powered by Chaikin Analytics. After bumping up against diagonal resistance under extreme overbought conditions, we expect at least a pause and quite possibly a continued stock market pullback in the coming days. In the video, we were quite confident the market wouldn't hold its highs today, and we were proven correct. Despite the large swing to the upside, the market has not yet put in a higher - high. So, our trend forecast remains neutral with a greater likelihood of downside price action in the near term. I'm less convinced than AA that we'll retest recent lows. I see a pullback to a key retracement level. See the video for more.
Our relative strength analysis, which includes Chaikin forecasts for the coming 3 to 6 month period along with past one, three and six month return time-frame,s can be viewed here and below. In today's video, we explain what the metrics mean. Bulls should look for stocks in sectors showing green in both forward Power Gauge forecast collums and recent return % columns. Healthcare, for example, appears poised for a bounce after its recent pullback over the past month. Bears should fish for stocks in sectors that have been weak and are forecast to remain weak. Bearish trades in Energy and Materials seem the best bets. Overall the market may be in transition. We'll either confirm or negate a Bear Market chart pattern in the coming weeks. A break through diagonal resistance and a powerbar differential on the SPY above 1.1 would change my market posture from Neutral.
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