Encouraging bounce, and odds favor that lows could be in

Near-term Equity trends look to have stabilized following the minor two-day severe setback that resulted in about a 38.2% erasure of the gains since last November.  Fortunately, today’s turnaround gives some hope that lows could be in place as Equal-weighted Technology managed to push back to new all-time highs on a daily closing basis, and market breadth proved quite strong at over 3/1 bullish based on Advancers/Decliners.  Looking back, normal seasonal weakness, which happens during Mid-Term January, looks to have occurred right on schedule and normally turns back higher by 1/26, which translates into next Monday. For now, both Treasuries and Equities managed to rally in unison while Japanese Government bond yields and Precious metals both fell. Overall, I feel that Wednesday’s turnaround was constructive, but there remains more progress needed in order to have real conviction about a bottom being in place.

I discussed the key points regarding assessing the seriousness of this week’s selloff in last night’s report and would encourage those who missed to review the Technical report from 1/20/26.

At present, the charts help to shed some light as to the minor progress that occurred on Wednesday, along with what more needs to be done before thinking a push back to new highs is imminent.  

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