S&P 500 Index (SP500)

[DiscoverGold]

Trading Notes: Wednesday, February 24th
By Brett Steenbarger, Ph.D.

* February 24, 2016

* Yesterday saw a significant pullback in stocks--a trend day to the downside--with weakness continuing in overnight trade. The fall in oil prices, with hopes of production cuts dimming, continues to weigh on stocks as part of a general deflationary theme, with notably weak equity performance coming out of Europe. I continue to track these macro themes closely.

* Many of my cycle measures are maturing. Should forward market strength prove unable to decisively break above the 1940s area resistance for ES, I would look for a fresh leg down in stocks. The current market action, with the larger than normal drop yesterday and early today, reminds me of the cycle that occurred early in 2008, when a January low led to a choppy, but ultimately weak, cycle higher prior to the significant drops later in that year.

* Here's how we stand on one of my favorite measures, an intermediate-term gauge of new highs versus lows specific to the SPX stocks. Despite yesterday's weakness, we're closer to overbought status than oversold.



http://traderfeed.blogspot.com/2016/02/trading-notes-for-week-of-february-22.html

• George.

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