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The U.S. stock market is teetering, but just won’t fall off that cliff.
As the media prepares to write the eulogy for the bulls, and no doubt the bulls do appear to be on life support, let’s remind ourselves they still have a pulse and shallow breath. As long as they have those two things, no one should dig their grave just yet.
Yes, the indexes broke through the major support levels we’ve been watching for quite a while, and that break should lead us lower.
Then why aren’t we heading south? The monthly jobs report came in way hot this morning, leading everyone to think our wonderful Fed will hike interest rates even further; which, in turn, will tank stocks.
And yet, as we write this, the stock market – after being down big at the opening and teetering right on the edge – is rallying.
This rally in stock market trading reminds us of the famous quote that goes something like, “When everyone thinks alike, everyone is likely to be wrong.”
Our technical analysis clearly shows we have broken through major support levels, which signals weakness. It significantly increases the odds that stocks are heading lower and raises the risk of owning them. It’s just odds, folks. The fact is the market is oversold short-term after the bears have thrown everything and the kitchen sink at it.
So despite what the odds indicate, as long as the bulls remain alive, and we see a continued rally in stock market trading, just like Jim Carrey said in the classic “Dumb and Dumber:” we’re sayin’ they have a chance.
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