Stock indices continue to test but hold their respective downside KRAs. Our breadth work continues to suggest there is considerable downside potential, but if the indices begin trading above their respective HVNs it signals they are simply not ready to go down and that this month’s highs will likely be tested. The best strategy is to favor trades on the price side of the index you are trading. As of the Thursday close all the indices are below their respective HVNs so consider favoring shorts.
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