Tuesday, June 23, 2009

Interesting Juncture

Unless the market rallies strongly tomorrow, it is quite possible that we will see a confirmation of an intermediate downtrend sometime between tomorrow and Friday as determined by IBD. However, all but one of the systems I am following in the System Tracker are either long or neutral. In addition, the Qs are coming down to the 200dema from above, and even if they go below, a first test would still have bullish implications.

The Dow Transports and the XLF/BKX are only 2 to 3 days away from possibly completing zigzag (ABC) corrections. A confirmed downtrend signal, should it occur, will likely prove to be a false one as the Qs come into the previously cited support zones and the SP500 finds support in the 850 to 875 area.

The McClellan Oscillator stands at -214 today. If we see a -300+- reading as the Qs hit the support levels on or about Friday, I will be looking to exit index short positions and reverse and go long. I typically do not buy into pullbacks, but this is one case where the pattern, timing and technicals are lining up to give us a low risk long entry.

Many of the leading stocks have triggered trailing stop levels which is probably the time that institutions will be stepping into to buy the next rally.

If I am all wet, it will be plainly obvious very soon as any rally from an impending low will sport the usual bearish technicals such as falling volume, lack of leadership, flat to falling breadth, etc.

Shorts beware.

1 comment:

dave said...

Presently, Nasdaq A/D Volume is incredibly lopsided 1,137,000,000/77,000,000; but IMO there is relatively a lot less price progress to show for it - Nasdaq +2.18%. To me that's as efficient as a vehicle getting 6 mpg.

Seems to me a lot of window dressing without that much to show for it.