Major averages fell yesterday on lower volume and managed to recover some of their intraday losses. The number of distribution days remains pronounced, and the troubles staging any meaningful rally remains. Nevertheless the S&P 500 and the NASDAQ Composite held support along their recent lows. The NYSE Composite Index found support at its 200-day moving average.
Whether the bounce holds remains to be seen, but futures are up at the time of this writing. Since late 2014, the bullish effect QE has had on the markets has clearly diminished compared to the period between early 2009 and late 2014.
Keep a close eye on potential shorts as per the guidance reports we have been sending out. While some of these names have dropped in price since we first reported on them, any market bounce could bring them back up into areas of potential resistance, and in some cases could stop out short-sellers. Short-selling generally requires a great deal of persistence and a willingness to remain flexible, sometimes shorting, covering, and re-shorting a stock several times before a major downside break develops.
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