After the many long-term breakouts we have seen of late, a pause should be considered nothing out of the ordinary. But you certainly do not want to see too much or too ferocious of a giveback back down to the scene of the primary breakout, else is raises the specter of a vicious bull trap.
For starters, consider the financials, industrials, and energy sectors, all shown below on their weekly timeframes. The financials have held the $17.10-$17.20 admirable thus far, the scene of prior multi-year resistance. Industrials are quite impressive indeed, led by General Electric among others. Energy stocks have retraced back down to their respective breakout point but are bouncing into the end of February.
The initial pause is all well and good, but should be taken with a grain of salt that these backtests are still a work in progress. _______________________________
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