Market Sentiment

One of the best sites that I have found for free market sentiment data is Market Harmonics. The Options Buyers Sentiment Gauge is currently in neutral, but the Eliades New Trin and Nasdaq Composite New Trin are indicating an overbought condition even after the decline of the last two days. These indicators are consistent with an upward correction as opposed to a new trend thrust. If the markets had broken out above the 10/14 highs and the 50dema, then the interpretation might be different.

While the current decline could be wave d of the developing triangle, it could also be wave b, so we could continue to see sideways movement for another week, unless the 11/4 high is exceeded.

The INO TV Saturday seminar series had an interesting seminar from Charles LeBeau today. Check out the link above. As he explained his interpretion of the ADX, it is also clear that we are in a correction. I use the 10 period ADX. Currently, I see that the ADX is declining indicating a correction, and DI- > DI+ indicating a downtrend. LeBeau recommends buying pullbacks in an uptrend when the ADX is declining. In the current case, we have the opposite, so we should be selling rallies. Very interesting to see another method that confirms the state of the market.

Comments:

The only rules that I am aware of for extended waves is that they usually occur in wave 3 or wave 5 and usually only one wave is extended. For stocks, wave 3 is generally the extended wave, but for commodities, it is generally wave 5. Extended 5th waves often retrace to the point of origin.

I appreciate the compliment. It takes a lot more work to produce intelligible commentary and ideas than I could have imagined before starting this blog. I have a great deal of respect for anyone who publishes substantive work on daily basis.