Did We Get the Anticipated Correction?

Monday was a down day with all indexes closing in the red. The breadth on the TSX was very negative with decliners beating advances by 2.5 to 1. All the Canadian sub-indexes were negative, showing the decline was broad based, across all sectors. The DJIA, dropped all the way back to its 200 day moving average. It will be important for it to hold in this range. The S&P500 is also almost back to the 200 day moving average as well. The Nasdaq remains the strongest index with the biggest window between the price and the 200 day moving average. The US Dollar bounced back up to its 30 day moving average but remains below the key 50 and 200 day moving averages, and therefore remains in a negative trend. Gold and silver remain in a sideways trend, trading in tight ranges.

Futures this morning are positive and the DAX is positive, indicating a positive open. The market condition scans are showing a high number (202) of overbought stocks but sell momentum is low. This suggests that we could continue to see some more mild correction, but there is not enough energy yet for shorting safely. The market bias indicators are showing bullish indicators, which means statistically, we could see an up day after yesterday’s sell-off. Given the mixed signals, we once again have no really strong directional bias.

Index	Change	%Change	Level	Phase
TSX	-250.18	-2.35%	10394.78	Bullish
DJIA	-187.13	-2.13%	8612.13	Recovery
Nasdaq	-42.42	-2.28%	1816.38	Bullish
SP 500	-22.49	-2.38%	923.72	Accumulation
Russell 2000	-15.00	-2.85%	511.83	Accumulation
NYSE	-181.35	-2.95%	5967.26	Accumulation

Source: Telechart

Short Term market outlook:

Bias: Scans showing a neutral bias

Energy: weak

Primary Trend: sideways

Sector	Phase
Consumer Staples	Recovery
Healthcare	Recovery
Technology	Bullish
Utilities	Recovery
Energy	Accumulation
Financials	Recovery
Industrials	Recovery
Materials	Recovery
Consumer Discretionary	Recovery

Source: Telechart