So today was a pretty decent sized down day. We are already hearing people call this the beginning of the end. Well, I would argue that it is much too early to call. I do believe this rally has been irrational, but the action today doesn’t mean that it’s all over.
The long term trends we have been in for all the major indices are under threat, but they have not broken down yet. If we have another down day like today, then we would have to call this a definitive break out of trend. At this point, the trend is still on. We are just calling this one an over-extension past support.
You have to remember, the markets hit multiyear highs just yesterday. We don’t want to fight this thing just yet.
I don’t want to come off overly bullish here. There are some definite risks of the rally continuing, but we’ve seen, time and time again, strong trends use these down days as buying opportunities. As noted in the video, the RSI reached extremely overbought conditions. This is usually a sign of exhaustion.
I will certainly be keeping you updated as developments arise. It seems as though we may be on the precipice of something here, so make sure you stay tuned.
Thank you for reading and watching.
This article was written by joe.shehata