Sustenance for a Rally

The market is starting to bounce off the internal oversold condition created over the last two weeks. The question traders are asking themselves is whether the rally is sustainable, or is the move a simple countertrend bounce within the downtrend?

We believe the weakness has been correctional in nature, and the market created the sort of oversold conditions across our range of indicators, which suggest a sustainable rally is on the way. But we are concerned about two critical market sectors: technology and financials. A market rally cannot persist and move higher in a meaningful way without the participation of the either the financials or the technology stocks. The healthiest market conditions typically involve both groups pushing higher and creating a broad-based bottoms-up rally. But we see problems with both sectors, and if the market is going to push higher and reassert the cyclical uptrend, there will have to be some sort of internal improvement created in these groups....353 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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