Dear Subscribers:

Today we get another weak opening in equities (3 in a row) as Existing Home Sales comes slightly under expectations and the market relieves some technical overbought conditions, allowing moving averages to catch up.

However unlike yesterday, most leading stocks are acting well and showing strength.

Many major indices are testing yesterday's lows at this moment or making new lows. However the leaders are strong and we are seeing good gains and new breakouts across the board.

This is a positive divergence.

But technial leaders are strong:

The momentum run without corrections that we have witnessed has been remarkable and a rare occurance in market history.

This study from Sentiment Trader shows that in the other instances in which we had such a strong run, the market tended to show very positive returns going forward.

Best regards, 

                    Victor Riesco