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Stock Market Pullback or Bear Market Beginning? (Moment of Truth Part II)

Courtesy of Chris Kimble.

Stock Market Indexes Topping?

Well, that was fast. The stock market pullback has been sharp and likely is not over yet.

Last week, I shared the same chart, calling it a moment of truth for the stock market. Would the 3 underperforming stock market indexes (in the lower half of the chart) bring down the outperforming 3 indexes (in the upper half)? Dow JonesS&P 500 IndexNasdaq 100 versus the Russell 2000Dow Transportation Index, and S&P Mid-Cap Index.

So far, the answer is yes. Well, at least the under-performers have helped to bring about a short-term sharp pullback.

BUT the question now is: Will the underperformers drag the broader market into a correction… or perhaps a bear market?

Let’s look closer at the chart above.

As you can see, each of stock market indexes in the upper and lower half is testing critical up-trend support at (3). Bulls need these price areas to hold.

If support at each (3) breaks, bearish messages will be sent after small, mid and transports sent a bearish divergence message of late.

This article was first written for See It Markets.com. To see original post CLICK HERE.

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