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Jeff Cooper: Is the Latest Market Selloff a Setup or Set Up?

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The important 3 Day Chart has turned down.

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The SPX has turned the important 3 Day Chart down for the first time since the August low.
Why? Because it shows 3 consecutive lower daily lows. This is not the only way the 3 Day Chart can turn down. It can also occur on trade below a prior 'circled' 3 Day Chart low.

This turn down is occurring roughly in tandem with the 50 dma.
It's a 'picture perfect' set up.
Especially going into quarter-end.
However, given substantial divergences and distribution days, the setup is not so clear cut---especially given seasonality.
So, while a rally phase may play out---potentially even to a new all time high. If this morning's low is broken over coming hours/days, the ensuing move is likely to be powerful on the downside.

Twitter: @JeffCooperLive

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No positions in stocks mentioned.

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