There was a single compression yesterday in Dow index futures. This index was also the source of the top extensions at the very end of last year that most recently made us bearish of the US equity market:
As we warned in the last newsletter (Jan 20th edition) these extensions were running out of time but now this compression has come along to keep us bearish IF it breaks down. So far, today’s price movement has indeed been down (as shown on the chart) but we need to see this weakness maintained until the close today for this to represent a good ‘clean’ break.
More soon,
RE
