Friday, January 31, 2020

SPX and INDU: Important Support Zone

Last update, we looked at some of the warning signs for bears that the decline may have completed on Monday, and the market has been range-bound since then.  INDU did not quite overlap its prior wave 1/A low and was rejected from that zone, leading INDU and SPX both to retest Monday's low.

So far, that retest has held:

Yesterday's low also coincides with a second test of the long-term blue trend line on the chart below:

In conclusion, one thing the market has done with the last couple days' action is solidify the significance of Monday's low.  If bulls can hold that low, then they're clear for new all-time highs.  If bears can break that low, then it probably shifts things to bearish for the immediate foreseeable future.  Trade safe.

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