In last week’s outlook we warned for a December dip in stock markets.
The market has showed some weakness already, but Friday’s surge recovered most of the losses.
Unfortunately, that hasn’t really improved the technical picture.
Here is the current chart for the Nasdaq (click for larger image):
The chart is very similar to the S&P chart we presented last week.
The Nasdaq is in a rising wedge with bearish divergences in my Earl indicators, suggesting that the next move is more likely to be down than up.
Our key reversal levels also show a weakening picture for most stock indexes.
And we remain in lunar red period, so the downside risk is bigger than the upside potential at this point.
I don’t see any good reason to buy.
So, wait and see is the place to be.
Danny
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