Wednesday, November 19, 2014
Equity correction may be cruel
The weakness in equities follows a strong session yesterday and we would expect the lack of follow through to be particularly disturbing. Prior to the break higher yesterday, price action had consolidated and several bearish technical patterns emerged.
There have been 19 new highs without a three session pause – an indication of overbought conditions. There was of course the record string of 12 consecutive new session highs we commented on earlier. Without at this stage offering any downside objective other than noting a 2-3% correction would largely remove overbought conditions, we would simply warn that a settlement in ESZ4 at or below 2039 would create a bearish engulfing and send a strong warning for lower prices to follow.