Technical Strategy Video:

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The video in this report is only accessible to members

Key Takeaways

  • Market bottom still elusive, but initial low expected this week. 
  • Energy relative breakout to SPX makes this a great sector near-term to overweight
  • MSFT getting close to support and after-hours volatility could provide opportunity  

US Equity markets should be close to trading lows, but as discussed, a bottoming process normally takes time, particularly after a 10% drop in just 14 trading sessions.   Many bounces are prone to initial failure and retests.  Overall, given factors such as oversold conditions, severe breadth contraction, and signs of bearish sentiment growing more extreme, I do expect a trading low to materialize this week and potentially after FOMC.   Technically it appears right to position for a bounce, though still can’t rule out Monday’s lows being tested or even breached by a small amount.   Structurally, Elliott-wave structure would show a completed 3rd wave under Monday’s lows before a sharp rally.   However, to expect markets have a chance at moving back to new highs, prices need to recoup 4582, the 1/10/22 low which looks premature to speculate on just yet.   Overall, hourly charts still show declining highs and poor technical struc...

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