V-Correction Or Breakdown?

S O L A R C Y C L E S

The bounce yesterday in equities arrived at an appropriate point when stock indices are cross-referenced technically: channel support on the SP500 and key horizontal support on the Russell 2000:

Screen Shot 2014-10-03 at 09.04.23Screen Shot 2014-10-03 at 09.33.33

Plus rising support on the Hang Seng – which has generated what could be a fake-out above the long term wedge followed by a breakdown (if it can break):Screen Shot 2014-10-03 at 09.05.12So can all these indices break down, or are we to see another dip-buying v-correction?

3oc11

 Source: Stockcharts

On the above chart a positive RSI divergence was a reliable signal for a v-correction bottom. We do not have that yet, which suggests there should be another leg down of selling, even if shallow, where momentum wanes, if this were to be another v-bounce. This period into next Wednesday’s full moon is the likely window for this additional selling to occur.

However, beyond the prospects of a slightly lower low ahead, could this be the correction that…

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