Key indices across the U. S. equity market are testing their uptrend lines stemming from the February lows.
It’s only fitting that today’s Chart Of The Day includes a trendline considering our regular ‘Trendline Wednesday’ feature on Twitter and Stocktwits (follow us on both platforms: @JLyonsFundMgmt). Granted, it’s not the most profound trendline we’ve ever monitored. However, it very well may be quite significant on an intermediate-term duration. Furthermore, as the subheading indicates, there are many other segments of the market presently being impacted by trendline dynamics similar to those illustrated in the example here.
So what are we looking at? The index is the broad NYSE Composite and the trendline is the uptrend defining the post-February rally. Specifically, the trendline originates at the February lows in the NYSE and connects the June Brexit lows as well as the early September lows. Why is this line so important? First of all, because it traces out the precise lower bound of the NYSE’s post-February rally. Secondly, the NYSE is presently testing the top of this line.
So is this line going to hold? In a vacuum, the assumption is always that a trendline should hold – until it doesn’t. Therefore, in this instance, the recent price weakness should be contained at these levels. Thus, if one is looking to ‘buy the dip’, this seems a reasonable spot to do so.
This post was published at Zero Hedge on Sep 29, 2016.