Rally Attempt Ends As Stocks Negatively Reverse

Rally Attempt Ends As Stocks Negatively Reverse

Looking at the market, Tuesday’s ominous action effectively ended the current rally attempt and suggests a steeper correction may unfold. It is also important to see how the major averages react to their respective 50 DMA lines. Until they all close above that important level the technical damage remaining on the charts is a concern. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is paramount.