Is this week’s stock market advance a dead cat bounce

The S&P 500’s weekly chart (shown below) shows the difficulty clearer than the daily chart. Two weeks ago the S&P finally climbed back into its bullish trend channel. But, this very weak bar with its close well below its high, showed that there was no staying power. The big drop last week confirmed the weakness in the previous up week. This week’s up bar has not reversed the previous down bar and, with only Friday left, looks like it will have low volume. In other words, a weak support for higher prices.

Look how long prices have been near the area where the S&P closed today. The earliest was on the high of December 5, 2014. That makes almost a year of price not able to move higher. The longer price stays at this level, the more likely it is that the stock market will crash. Those of you who don’t often watch the markets will be well served to move all your positions to cash.


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