The US Dollar Index was sharply higher after the probable completion of wave 5 of C down. The MACD is close to a new buy signal. Gold, silver, oil were down on the day and all things appear to be set for a selloff in commodities and a rally in the Dollar. Any follow through in the Dollar on Monday with a positive close will confirm the turn is in.
The Nasdaq indexes failed to confirm the new highs in the SP500 and Dow, which supports the view that a correction in those indexes began on Wednesday. The SP500 and the Dow will likely play catchup over the next few days. However, given the late start of this correction, it does not appear at the moment that it will be severe.
The number of text book bases has increased significantly since early July and traders should not be having problems finding good breakout opportunities. EBS and ADSK are a couple of recent breakouts. These may be opportunities to buy on pullbacks nearterm. BWLD has formed a nearly perfect cup and handle base. Do your homework.
This rally is beginning to have the feel of one that could have a blowoff top in September and October. It can be difficult to hold on during the wild swings that are occuring in some stocks, but if we do get such a climax run, that will be where the real profits are made in the second half of this rally. The key is to build into positions in August and let them run in September when all of the late comers are jumping in, while being prepared to take profits in early October. Alot of money was made in March and April. I think we will see the bookend of that opporunity begin in earnest in a couple of weeks. I could be completely wrong on this, but that is how it feels to me at the moment. That's not very scientific, I know, but sometimes the intuition, based on experience, must be heard.
6 comments:
There were non-confirms in daily charts of most major indices all over the place today: Wms %R, RSI, Ult Osc, OBV, Slow Stoch...probably because most of these reflect the same things. All except the big one MACD...
And the canary in the coal mines, the lead husky $SOX was down most of the day. Hourly $SOX has a potential double top with a perfect volume pattern. EMC's hourly chart has a potential H&S top with a beautiful volume pattern.
OTOH, volume today was generally bullish. And despite the non-conf's on daily charts there was no acceleration to the downside this afternoon.
I realized early this morning that despite the early strength that Slow Stoch was NOT going to cross to the upside today for any of the major indices.
Regards
dave
"This rally is beginning to have the feel of one that could have a blowoff top in September and October. ... but if we do get such a climax run, that will be where the real profits are made in the second half of this rally."
Like Stephen Schork said "i'll be short at the bottom". Let the mkt take us out; don't get out. I'm down "wid dat".
Regards,
dave
Agree on both comments. We are seeing the early signs of a developing correction, but I unless something big happens next week, it still doesn't look like it will be severe.
I personally believe that there are major players in this market that are trying to cover short positions without causing a squeeze. So many have publicly stated that they would remain short until SP 956 was taken out. Now that it has been they are stuck.
If this thing does take off as I expect, it will be a short squeeze, in my opinion.
"If this thing does take off as I expect, it will be a short squeeze, in my opinion."
Note what happended to AIG this week. Anyone who doesn't understand what's happening there would be better off sitting on their roof with a tin hat on during a thunderstorm.
http://www.vagabondish.com/wp-content/uploads/2007/06/tin-foil-hat.jpg
Now you know what i look like.
Regards,
dave
An less experienced trader might be confused by some remarks that i've made here. I am not necessarily talking about a major or even intermediate top ... yet.
However, given the most recent sentiment stats and the nonconfirm's above. And i'm not referring to the overquoted AAII or II, but instead to Mkt Vane (which i prefer), Ned Davis' & Jake Bernstein's sentiment work the mkt needs AND is ripe for a shakeout.
The train not only doesn't leave the station fully loaded; it doesn't get to Xville fully loaded.
Regards,
dave
Got it.
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