January 29, 2021, 4:38 pm EST
After a couple of weeks hovering around the record high level, stock markets decided to give up by rolling over and breakdown. Please note that yesterday’s rebound failed to put DJIA (ETF: DIA as shown) back to its rectangle box. High volume on 01/27 and 01/29 also registered an exodus from institutional investors. High volume distribution events are bearish because it recorded how strong the faith investors have for the long-term view of the stock markets.
Therefore, it is expected downhill actions would occur for the next few weeks until 284-288 support zone, the previous gap-up area.
As we can see from the chart the uptrend has been terminated and the downtrend started. It is still unknown whether 284-288 can prevent it from falling further. We will measure how fast and how big (the volume) of the downtrend process, which is called the momentum, to determine the strength of the stock markets. At this moment, the short term looks bearish.