Is S&P 500 Ready For Dead Cat Bounce?

By The Wall Street Fox Wednesday, January 13, 2016
Buy the dips has turned into sell the rallies. Will the S&P 500 dead cat bounce off of this short term trend line?

 
The S&P is down more than 7% YTD and is officially in correction mode. For the time being, expect any rally to be sold.
 
Defensive stocks are outperforming the market, signifying a flight to safety. As long as the stalwarts of 2015 keep dropping (think FANG, healthcare/biotech), expect more selling.
 
 
Small caps, health care, and transportation indexes need to show constructive price action/bottoms being formed, which is not yet the case. Until then, expect an overall weak market.
 
 
 
 
Perhaps the S&P 500 bounces off of the short term trend observed above, but long term, it looks like there will be more selling pressure in the market. To me, solely focusing on technical, It makes sense that the S&P 500 will establish its dot com bubble high and 2007 housing bubble high as support.
 
 
Fundamentally, what can change this? The fed pulling an about face and easing, a stronger global economy than originally anticipated, a stabilization in oil prices.
The Wall Street Fox

The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.

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