“Coming Soon” – The Retest

Sunday, January 20, 2019
By Paul Martin

by Sven Henrich via NorthmanTrader.com,
Sun, 01/20/2019

Bulls not only returned to the scene of the crime, they trampled all over it by re-entering the consolidation range of October – December. Bottom decelerations are made daily and with a Fed busy signaling patience and positive China trade war headlines juicing markets almost daily now volatility has again been crushed and the panic of December is long forgotten.

And that’s the key phrase here: This rally has not been tested and it’s my premise that it will. On Friday I outlined some reasons why it will in Stay Alert and today I’ll dig a bit deeper as to the technical reasons why this rally will get tested. Whether this test will end up being a technical retrace, a full retest, or even new lows is way too early to determine, but let’s look at the charts for evidence.

Firstly, why is it way too early to call a confirmed long term bottom?

Consider the context of where all this bottom calling is taking place: Below the 200MA. Since most if us have probably forgotten what evolving bear markets look like here’s a historical clue: The most vicious counter rallies take place from steep drops below the 200MA:

The Rest…HERE

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