Stocks sold off very hard today and set some new recent lows.
There was a technical oversold rally into the close led by Big Tech that brought stocks back up to near even or lesser lows, holding support around the prior lows from the end of last year.
So what next?
Clearly we have a major adjustment happening to a chronic mispricing of risk and a financial asset bubble. I mean, how many times have I said this was a bubble, and that there was little strength underpinning it?
I am expecting a short term capitulation low. We *might* have seen that today, or we might have to go back down again and flush the market out and retest today's lows. It depends on how much of the rally back this afternoon was short covering and the resurgence of the mo-mo dip buyers.
But at some point we set a low, and then we should rally back, maybe as much as thirty to fifty percent of the recent declines and then, if nothing much changes on the global scene, we will go back down and retest the lows and set some new ones. I am looking at 1770 on the SP 500 futures chart.
Until there is reform, there will be no recovery. And I see little moral high ground with many people on it still standing.
Have a pleasant evening.
