Loud and Clear

The market spoke loud and clear today with a solid move above the recent pullback.  The current move up should be wave (C) of [W] or C of (W), which should last into the end of November or early December.  The next pullback to support should be a buying opportunity.  When it will begin is anyone's guess, but probably soon.  The October 20 low should not be broken.

Pullback May Not Be Complete

The most notable feature of the market's action this week was that the Qs did not make a new high for the recent rally while the SP500 did.  This negative divergence suggests that the pullback is not yet complete.  I propose that the Qs completed wave b of the pullback or nearly so on Friday.  Wave c down should begin sometime early this week.

It follows that the SP500 and other similar markets are probably trading out an expanded flat or running triangle pattern.  The main point is that, barring a breakdown, the pullback should be complete by the end of this week with a target at the 50ma.

The equity only put call ratio shows that sentiment has not yet reached an extreme and the rally has further to go.  If history is any guide, the rally should continue into early December.

%Stocks Above 50MA Confirms Uptrend

The breakout in the % of stocks of the 50ma above its recent swing high from an oversold condition confirms the current uptrend.  There is resistance at the downsloping trendline which suggests that near term upside potential may be muted.  A pullback to the 35% to 40% area would be in line with prior pullbacks.

At the moment the market does not appear to want to move to the downside, but rather trade sideways.  Even so, it is premature to consider the pullback as complete.  If it is a triangle, it has at least another day or so to go.  If it is a flat or expanded flat, then lower prices may be seen.  If it is only in the first leg down, then the pullback could last until the end of next week.  It is still too early to tell.

Be Patient

It finally looks like the pullback is gaining some momentum.  We need to be patient and wait for a clear indication that the pullback is nearing completion before taking any new long entries.  Of course, an upside breakout would qualify, but I don't think that is going to happen right away.  A better setup would be a pullback to MA support which is still below the market.

Still Looking For More Pullback

When a pullback or correction begins there is no way to know what form it will take.  Today the high for the Qs exceeded Friday's high, so the new high could end the first leg of the rally, or it could be part of a running triangle or expanded flat.  The fact is that the market is extended and the most likely next move is a pullback to the moving averages either by going down or moving sideways.  Of course, the market could continue to march higher, but we are due for some give back.

Pullback Underway

I am running behind due to recovering from computer problems.  Thanks for your patience.  It looks like the expected pullback is finally underway.  It should continue for 2 to 4 more days.  At that time we can re-evaluate the potential for further corrective action.

Still Expecting A Pullback

The market has continued higher the last two days even as the number of new 52 week highs has declined.  The SP500 has retraced almost 50% of the entire decline from May, so a 3 to 5 days pullback would be normal and expected.

IBD has called the market in an Uptrend due to yesterday's confirmed follow-through.  However, this was not the most convincing follow-through as volume was not great, just higher than the day before, and the market closed well off the highs of the day.

Once the pullback is over, the probability of more sharp rallies similar to Monday's event is quite likely, so shorting is probably not the best idea right now unless you are going take very quick profits.

I am experiencing intermittent computer problems at the moment, so I may not post again until later this weekend or early next depending on how long it takes to get it fixed.