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A downward trend has been established which has now fallen 12.9% from the May peak levels. Looking at the chart (see report) shows that price action has surpassed its long-term 200 moving average and is beginning to turn both the 50 and 200-day average lower. What is more, a further decline should help generate a bearish 'Dead' MA crossover signal.

What next? Over the short-term horizon, price action is still rather oversold and we anticipate some healthy unwinding soon. Meanwhile, we remain on a cautionary footing for a weekly close below the October 2005 peak, near 3465. The longer we hold below here, the stronger bearish momentum should become for an extended retracement down to the late October 2005, near 3200

Our Investors Intelligence breadth indicators have partially unwound from oversold conditions. Although, closer examination of the bullish % line (which measures the number of stocks holding Point & Figure uptrends) is attempting to reassert lower. Meanwhile, the faster-moving %30 week moving average chart is still quite oversold, trading around the 17-20% area.

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