Markets rebounded as expected and then accelerated to the downside as soon as our lunar Red period got underway.
The recent Green period ended with a 63 point loss for the Nasdaq, and this suggests that the path of least resistance is down.
The Nasdaq is now holding just above the important 3000 level, while the S&P is also testing support.
Here is the current S&P 500 chart (click for larger image):
This market appears to be dropping from the trend channel it has occupied since June. We are right at the breaking point and with two more of weeks of lunar Red period to go, it is quite likely that this up trend will be abandoned. This would mean a probable visit to the longer term support trendline, currently just under 1400. If that doesn’t hold then look for 1300.
Uncertainty around the outcome of the US presidential election could also weigh on the markets.
As chart of the week we take a look at the Euro vs US$ (click for larger image):
This is a daily chart. The Euro has rallied nicely since we gave it a buy recommendation in July. Now, my Earl2 indicator has peaked, which means we have probably reached a temporary peak. I would look for the Euro to fall to 1.26, where some support should be met.
Be well, Danny