Can Stocks Recover from Lows?
Stocks have recovered from Friday's selloff. Though we have fully retraced from that dip, we remain under 4000, and well below the neckline of that failed head and shoulders pattern discussed last week. The fact that we broke down from the inverse H&S is foreboding and that we broke lower than the head (relative low) of this pattern is even worse. The Kovach OBV is extremely sold off, so we may have some hopes of a relief rally. If so, 4068 will be a formidable barrier to the upside. We should find support again at 3810 if we sell off further, but the next support level after that is in the 3700's.
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