Vast negative breadth, deeply oversold equities and declines on high volume underscore the risk with long positions. As expected, a modest-volume retracement of losses from the mid-January peak has proceeded. Wave theorists have labeled this recent decline as a start of a new impulsive downtrend, while simple trendline analysis shows mixed results. Historically, a surge in GDP, strong inventory rebuilding and generally positive economic indicators, following a recession, have been proceeded by a lead in the equity markets, only to settle for a retracement and often consolidation of those gains once initial economic strength has begun to surface in the headlines. We expect choppy market behavior favoring a bearish stance over the intermediate (30-60 day) timeframe.
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Forecast Update for May
4 weeks ago
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