US Stocks: Dominant Trend Remains Up
Eric De Groot | Sep 29, 2014 08:02AM ET
Price which smashed through trendline support with force on 09/25 failed to overcome it Friday (chart 1). Volume contracted to 629 million shares during the attempt; this suggests waning upside force. The longer price trades below old support as volume contracts, the more likely it acts as resistance for future rallies.
The timeline of technical events illustrates a cause building phase that the bulls have been slow to recognize. Cause building, periods in which sentiment and headlines follow price, represent the accumulation of energy necessary to fuel the next impulse wave. This wave usually follows the dominant trend. The dominant trend, despite growing pessimism, is up.
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