Wednesday, April 29, 2015

S&P Quick Look - Risk for 3-5% Correction Heightened

The S&P, by all appearances should have performed well following the struggle and break above resistance from mid-February.  That did not happen and instead there was a bearish reverse indicated in the 'bearish engulfing' noted in 'S&P Bearish Reverse at Prior Resistance' yesterday.  Price action late yesterday could have confused some that the bullish trend was re-engaged with the recovery.  Instead, our candlestick analysis suggests that the extent of the advance was too modest to indicate bullish prospects and instead a bearish 'hanging man' was formed.  A lot of analysts have been calling for a pull-back in equities.  The bullish price action of the last week however has likely found prior followers of that advice waning.  The risk has thus grown for a 3-5% pull-back.

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