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The video in this report is only accessible to members

Bottom line, the correction this week did cause some technical damage in trends, as both $SPX and $DJIA broke down to new monthly lows on the worst week since last September.  Financials weakness continued into Friday, and has spread to European Financials, which showed meaningful reversals after a very steep uptrend from last Fall.

It’s important to reiterate that despite the breakdown in Financials and broader index gauges, the Equal-weighted indices like Value Line’s Arithmetic Average along with the NASDAQ 100 index have both held up much better.  Furthermore, many of the best performing sectors for 2023 have also held up and not broken down.

The more important development concerned the degree that yields plummeted across the curve, which likely jumpstarts a large decline in yields over the next 4-6 weeks.

Overall, I expect that Equity indices can bottom out next week for a few important reasons:

First, two different cycles show confluence next week, with an ideal data of Wednesday, March 15thThe weakness into this period suggests this pullback should be making a cyclical low, not a high.

Second, momentum is now nearing oversold levels, and while not quite there, could be in place by next week.


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