The stock market took a hit on Monday, with the DOW falling almost 500 points. The drop followed Friday’s dip, but should be seen in the context of the S&P 500 rallying up to its 200-day moving average, needing to work off an overbought condition, and not some sudden news item impacting the markets. A lot of market commentators are predicting a weak market time now with a powerful new bull market in the second half of 2023. I actually think the opposite is going to happen and explain why in this video I did yesterday you can find here.
What you need be on guard for at this point is if bond funds such as the TLT ETF start to fall for a week or more while the stock market continue to go up. That would setup a negative divergence like we saw in August, but has not happened yet and therefore one should not draw a big conclusion from today’s market action.
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-Mike
