Yesterday, the bulls came charging out of the gate pushing the Dow up almost 250 points in the early going. But, to the shock of traders and the bullish crowd, the rally faded and the major indexes ended up in negative territory.
It’s too early to tell whether this total turn-around was a one day event or the resumption of the bearish tendencies, which have been interrupted by rebound rallies during the month of August. Our Trend Tracking Indexes retreated as well and are positioned relative to their long-term trend lines as follows:
Domestic TTI: -1.20%
International TTI: -7.77%
To me, the bear is alive and well and will most likely strike again. Yesterday’s reversal can’t be attributed to any one factor, there was simply no support for the bulls; even lower oil prices weren’t any help at all.
Commodity prices sold off along with oil, which many traders finally realized is a result of slowing economies around the world. Whatever the reasons, it does not really matter, the trend is down, and we will remain on the sidelines.