Mr. Market is a master of camouflage. We are now in the midst of the short-term correction that started evolving a little over a month ago, but is now coming becoming more visible. You can see the evolution in the chart below that tracks the percentage of stocks trading above their 50-day and 200-day moving averages.
The kind of weakness we saw yesterday is the right kind of tonic to improve our Psychology Composite as fear is good - rebuilding the "Wall of Worry." It is too soon to start counting those chickens yet, though.
In truth we would like this evolution to satisfy our yearning for a better reading from our Psychology Composite (currently at P4). A few of our indicators are improving, but they are still a long way from being in the "green" zone. So, we'll continue to take a very cautious short-term view as we watch this evolution.
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