A Reversal Day Often Marks The Short-Term Bottom

A reversal day often marks the short-term bottom. Now we watch tomorrow to see if the new 52-week lows drop down to a harmless level.

Feeling a little bit better about stocks? I am hoping that we see market consolidation in this sideways range. The consolidation could last for a number of months. My guess is that before the market can challenge for new highs, it needs to re-test the 2600 level.

There was no flight into gold stocks during this market sell off. I don’t really know why, but I think it may be because of the weak M2 growth rate. I am open to other explanations.

Of the 45 ETFs I monitor each day, GDX was the weakest today.

The challenge now is to figure out what the best performing sectors will be over the next few months. At the moment, I honestly don’t know. But here are some candidates.

The China large-caps didn’t even touch the 50-day average. Very bullish.

Large cap US retailers, also looking very strong.

Biotech retraced to the break out level, and then hung in there quite well. Bullish looking to me.

Home Construction could be a broken chart, maybe done in by the higher long-term interest rates? I am avoiding this group.

Emerging market stocks look healthy.

Outlook Summary:

Higher inflation and higher rates are now a headwind for US stocks.

The long-term outlook is positive.
The medium-term trend is down.
The short-term trend is down.