You probably did not need me to tell you that the Diamond consolidation is finally over and it’s a downward breakout.
- Support #1 (key for the near-term) is the 50 day average (318 and rising) down to 300 (lateral shelf).
- Support #2 (major) is the SMA 200 (currently 256 and rising).
A major support test would not be the worst thing in the world on the bigger picture. Again the reminder is that this index did great work in ringing the bell at the 375 target. That target took a year to come about.
A periodic running of the bugs is healthy. People should be prepared in whatever ways work best (profit taking, holding a big picture view, trimming, etc.). Assuming an intact macro – and until the stock market cracks I am not going to make that assumption – a major buying opportunity could come about if the sector is leading the broad markets (and the attempted reflation) into correction.