Yesterday's market action was positive.
To my surprise, the Nasdaq Composite fell for a fifth day in a row, dropping 0.75%. Trade did increase from the previous day however it was still below average (Point A) indicating a reluctance to sell from institutional investors.
Once again for the third day in a row, the big players stepped in to support the market, this time at 2838, an area just above its 200 day moving average (Point B).
The S&P 600 has been acting much better than the Nasdaq lately and yesterday was no exception. The small cap index fell just 0.1% after finding support at its 50 day moving average and then proceeding to bullishly reverse (Point C).
Russia outperformed, India and global materials underperformed.
Leading stocks action was positive. A slightly greater number of leaders were rising in heavy volume compared to those that were falling in heavy volume. When you see this happen on a market down day, it is classed as a bullish divergence.
Even though the market has surprised me over the last few days by dropping further, the market is still acting well.
What we are seeing right now is the indexes working their way through a correction. The market must have needed more time to mend and heal, hence why it's pulled back a little more before going higher.
It's clear to me from the recent behavior that we are still experiencing another healthy bull market correction and the bottom it made on the 1st June (Point D) still looks like it will be its ultimate low. My opinion remains that the market is more likely to head higher than lower from here.
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