Last week, key broad markets declined a little over 2%. Many feel the price action is being driven from the news coming out of Europe and for sure its hard to argue with that belief.
Since this is a Monday morning, I thought it might benefit us to take a little more of a macro look at the big picture and see what the market is dealing with.
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From a “Power of the Pattern” perspective, the Wilshire 5000 looks to have hit its neckline and backed off a couple of percent last week. The neckline remains resistance for the Wilshire 5000 and the NYSE Comp index. No doubt we will have another week filled with news coming out of Europe, some true and some rumors, which will cause continued large price swings. The neckline for the Wilshire comes in around 2% above current prices, so a rally could take place of this size and the resistance will still be in play.
I would follow a breakout if it happens, yet from a macro point of view, resistance is resistance until broken.