Faltering Friday – Markets Give Up Half the “Rally” on No News

The markets are very moody

Just when we got the S&P back to our 10% line, we're down 20 points this morning and back below the 50-day moving average (2,866), back at the 2,860 line that marks the bottom of our 5% correction zone on the bounce charts we've been using all week.  It's a very disappointing setback and, if this is how we're going to go into the weekend – we are going to need more hedges!  

At the moment (7:30), however, the 5% Rule's™ Bounce Chart™ looks like this:

  • Dow 25,200 is the 5% line and the bounce lines are 25,450 (weak) and 25,700 (strong)  
  • S&P 2,860 is the 5% line and the bounce lines are 2,875 (weak) and 2,890 (strong)
  • Nasdaq 7,475 is the 5% line and the bounce lines are 7,540 (weak) and 7,605 (strong) 
  • Russell 1,550 is the 5% line and the bounce lines are 1,565 (weak) and 1,580 (strong)

We were all red except the Dow (which was at the weak bounce line) on Tuesday morning so this is still progress, but just yesterday afternoon  we only had 3 red boxes left to capture and we would have been back to bullish.  That's what's useful about the Bounce Chart – it keeps you from making bad decisions by making sure the rally is real before…
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