Putting the Pieces Together
The bulls and the bears have both had plenty of technical "fodder" to toss back and forth over the state of the equity market and the sustainability of the current rally. The conventional wisdom is that the market has rallied back to the upper end of the long-term range and it's only a matter of time before we have another collapse back to the downside in a fresh bear market cyclical move. Traders have been conditioned over the last decade to expect this. A few "real" bulls are looking for an upside resolution and a potential end to the 10-year consolidation range. We see the elements in place needed for an upside resolution, but we also see short-term problems with the market structure. Nonetheless we're coming down tentatively on the bullish side of this particular argument.
The market internals are weak at the moment. The market has rallied on the back of a narrow band of large-cap names and created a bearish breadth divergence to the recent price action. This is a sign of weakness and limits the sustainability of the current move. At best, the market will need to consolidation and regroup. The worst case scenario is that a bearish catalyst will come along and the market will break down from the vulnerable internal condition....287 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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