The market just can’t find any downside followthrough.
In technical analysis, so many people look for patterns that are successful. Yet it’s just important to understand pattern failure.
So over the past two weeks, the market has been correcting between 2250 and 2275… a 25 handle range. Not a ton of volatility.
And into the end of the year, the market cleared under that support level, indicating a breakdown of support and potential to the downside.
But on Tuesday, when the markets opened for 2017, we saw a failed breakdown. This tends to be bullish and leads to followthrough towards the upper end of the range.
Core thesis remains the same. It will be a grind, most likely higher, with rotation in and out of different pockets of the market. Our job is to simply identify the best risk/reward when trending stocks go out of favor in the short term.