It is possible the correction is done and we'll just go ahead and rip higher to finish the rally from March 2009, but I don't think so. I think we finish our trip to the bottom of the channel and also make sure we fill the gap. (see 20 day S&P chart)
It is even still possible that we have in fact topped the rally from March 2009 and this rally is the first corrective wave of the trip down, but I definitely put this option as the lowest probability.
Here are the S&P charts;
10 week;
20 day;
The bank stocks have not participated much in this rally and are obviously still weak, as mentioned in the last post, this is not a good sign going forward and a sign of brewing problems.
I also took a look at IYR this weekend, which was weak on Friday despite the rally. If IYR starts rolling over, we will take yet another leader away from this market. Leadership is narrowing. Important areas like Banks and Semi's are not doing well. We are in a topping process, but it must be allowed time to play out. Tops can take awhile to form. The 2007 top formed for almost a year before the plunge finally hit.
Here's the IYR chart showing some weakness recently, that lower trendline is important for IYR.
Hope everyone had a happy Mothers Day!
GL tomorrow.
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