Monday, September 20, 2010

Divergences Developing

Among the divergences developing is the NYSE McClellan Oscillator vs the SP500. Notice that the oscillator is making lower highs against the highs in the SP500. The Trin closing today at 0.34, which is the lowest reading since September 1, coupled with multiple low readings over the last two weeks is another warning sign.

The pattern in the SP500 is still well within the parameters of a 3 wave upward correction. It appears that one more down up sequence is needed to complete the pattern, probably around 1150 to 1160. Note that it is still well below the Decadal pivot of 1160.75.

RIMM fell today and closed below the low of yesterday's downside reversal. It looks like RIMM is definitely out of favor. Oil also failed to confirm today's action.

At this point the powers that be seem to be pushing for a positive quarter with everything they've got, but is there anything to really support this move once the quarter ends? For all the talk of an end to the recession (are these guys for real?), business in my area has come virtually to a standstill. I know there is activity in other areas of the country, but frankly, I am just not seeing it. Is everyone waiting until after the election? Maybe, but if so, is there a reason for the market to rally into the election? I think we are going to get some resolution of this picture pretty soon and it may not be what most are expecting.

No comments: