Technical Strategy Video:

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The video in this report is only accessible to members

Key Takeaways

  • While a short-term bottom could materialize for US equity indices this week, it’s right to expect further weakness into late January before any meaningful low is at hand
  • Sector strength in Financials and Energy continues to hold markets up, creating a sloppier selloff than what would be the case if all sectors were falling at once
  • Technology’s breakdown is a key factor why market indices like SPX, NASDAQ have finally begun to show more weakness like the rest of the market started back in November

Nasdaq 100’s QQQ ETF, the Invesco QQQ Trust, remains vulnerable into the back half of January, but made an impressive stand at an area that was sorely needed Monday after plummeting down under 370 early in trading, Monday.  While this area is indeed important given the 10-month trendline, it’s also important to note that momentum remains quite weak right now.  Moreover, Elliott-wave structure still argues for a greater than average probability for a pullback down to 358-360.   Overall, Monday’s lows at 369.31 are important to hold, but bounces likely find strong resistance at 386, with 391 being also important.  SPX has strong support at 4...

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