Confusing Composite:

Many interpret a healthy bull market with an abundance of participation from the vibrant technology sector. It gives a “risk on” flavor as investors search for capital appreciation. The Nasdaq has been sending mixed signals. Over the last one month period tech, as measured by the XLK, is just the seventh best major S&P sector of eleven. The index should be given the benefit of the doubt as long as it remains above its 50 day SMA, but its leash is getting tighter. A potential handle on a cup base that began on Monday 10/12, is looking more like a potential double top at the round 12000 number, and notice on the chart below that 10/12 session traded into a bearish doji candlestick at all time highs recorded on 9/2. That type of candle often foreshadows a change in the prevailing trend, and thats just what it did with a 1600 handle decline in a rapid 9 of 12 day losing streak. Question now has its “time served” been enough? Next week is crucial as this elongated handle is becoming more faulty by the day. Obviously the benchmark is hesitant with a looming election. Keep it simple, and remain mildly bullish as long as we float above 11300. A CLOSE underneath that number and all bets are off.

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