Stocks Begin Short-Term Reaction as Cyclical Trend Score Approaches Sell Territory

| May 27, 2010

The stock market has been attempting to form a short-term bottom since Tuesday, and today the likely start of an oversold reaction was signaled by a close above congestion resistance in the 1,090 area.

Our analysis suggests that the developing rally will likely terminate in the 1,040 to 1,070 range sometime over the next several weeks. The Cyclical Trend Score (CTS) is now at -48 and continues to trend down toward sell territory below the -65 level.

It is important to note that a move below -65 by the CTS would not itself signify a confirmed sell signal if this short-term rally continues to develop as expected. In that case, a confirmed signal would be generated when this next uptrend breaks down. We will alert you via e-mail if and when a confirmed sell signal is imminent.

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Category: Commentary, Market Update

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