Correction or Change in Trend?

The stock market is coming to a very important fork in the road. The Dow has fallen from its recent highs near 9,950 and has now fell back to near 9,600. Since the average daily range for the Dow is slightly over 100 points, this decline is not too severe as far as corrections go.  The same can be said for the SP500 and the Nasdaq 100. What we have so far is a typical price correction in a bull market. We do not have enough evidence that the bull market has changed tends to a bearish trend.

That said this coming week may be an important week, as we continue to watch this price decline. If the Dow breaks below 9,500 this coming week, traders need to turn on their more sensitive radars and begin to watch prices more closely.

“Vertical” selling waves can sometimes be the start of a much larger correction or change in trend. So far the Dow has had down closes for three consecutive days. If this wave of selling continues, it may set up the first major reversal since the entire bull market began in March of this year. We will continue to watch the market in our daily blogs and let the Shufflers know, if they should begin to ring the register and bring in some profits from this recent bull market.

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