So much for my prediction that Wall Street would be moodless when the markets opened on Monday. Sellers were in a mood, that’s for sure. The Dow was down as much as 222 points in the early going, for who-knows-what reason. This would have been a breath of fresh air for bears who have waited patiently for signs of sanity in the markets. Traders have been more than a little gung-ho on the Trump re-flation trade, having pushed the Dow and the S&Ps 13% higher since election night. But there are limits to what one man, even Trump, can do to improve America’s a moribund economy over the short- to intermediate-term, and that’s why the buying binge was due for a rest. From a technical standpoint, however, the weakness will remain insignificant until such time as the futures fall beneath the 2248.50 low labeled in the chart (see inset). That would generate a bearish impulse leg with the potential for a follow-through that would find little support for a hundred points. We’ll see what develops in the days ahead, but it looks like bears will have the wind at their backs for a rare change over the next few days. _____ UPDATE (Jan 31, 8:32 p.m. EST): A vicious short squeeze toward the end of the day recouped the moderate losses that had occurred earlier in the session, generating a bullish impulse leg on the hourly chart and preventing an almost unheard-of three straight losing days. The bounce will become more credible if it exceeds the 2286.13 midpoint resistance shown. If the move through that number is decisive, it would put into play the 2310.00 target shown. _______ UPDATE (Feb 2, 10:25 p.m.): Today’s rally was too feeble to expect stocks to make much headway on Friday. Buyers will need to close this trading vehicle above 2282.25 to give the broad averages a running start when next week begins.
