Yesterday, proved to be another breathtaking day on Wall Street. From my current vantage point in Hamburg, Germany, I was watching the European and Asian markets getting crushed with the U.S. futures pointing to a much lower opening.
The Dow dropped almost 300 points right out of the gate while the S&P; 500 gave back some 3% initially and briefly touched 1,041, which turned out to be a support level. Some of the shorts closed out their positions while market technicians used the 1,045 level as a buying opportunity resulting in a move back close to the unchanged line.
While yesterday’s rebound was a welcome reprieve, it does not mean the pullback is over. Some analysts believe a short-term rally over the next few weeks could push the S&P; back to just above the $1,200 level. While I can agree with that, I also believe that the downturn is far from being over and the possibility of another bear market still exists and may have been merely postponed.
Nevertheless, while things looked bleak at the opening, where a break of the domestic TTI into bear market territory appeared to be a sure thing, it did not turn out that way. The domestic TTI remains above its long-term trend line by +0.89% and in bullish territory. Internationally, things look a lot worse with international TTI being stuck below its respective trend line by -6.01%.
As I am writing this, the futures are pointing to a slightly higher opening. While this does not guarantee anything, it will be interesting to see if yesterday’s rebound has any legs to stand on or if we’re heading south again.