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Friday, November 6, 2009

Friday Update

The STO on the McClellen Oscillator is nearing its peak, showing the MO might be close to its peak also.
The Bullish Fib. fan is still being respected, but the SPX is losing its strength as evidenced by the SPX dropping to the weakest part of the fan, if we break to the downside of the last fan line chances are this rally will be over and a new bearish trend will be in play.

Something of interest here is the Bollinger Bands have really tightened up, normally a sign a large move is in the making!!


Mr VIX, needs to get its act together and get back out of that channel, the STO is suggesting that a low is at hand, and VIX is oversold.

Well we ended the week in a corrective wave 2, that is almost impossible to put a legit count on, the top should be very near, if it all ready has not happened. The volume today was really light, not something that one would expect if this was an impulse wave to higher highs, everything still points to this as a correction from the sell-off from 1101. SPX has not exceeded 61.8% retracement, floating around the 55% level today.


Breadth was 1.05:1 at the close on the lightest volume so far of this corrective wave up.


I thought it was interesting the market did not sell-off on the unemployment data, 10.2% was above the expectations of 9.9%, the market seemed to ignore the news, something we have not seen lately. Total unemployment now at 17.5% does not sound like the economy is recovering as well as the Administration would like us to believe!!

On the longer term Renko chart, most of the noise has been cut out for this corrective rally, the Full STO, has started to rollover and there is negative divergence on the Histo-gram of the MACD. A top should be in place soon, if it has not already occurred.


The shorter term, 5 minute Renko also shows negative divergence on the RSI, PPO and the MACD. The price action has fell out of the triangle, we just need to make a lower low to get the ball rolling for the next wave down.


The Russell so far this morning has been the weakest index failing to make it back to the green, and the VIX has yet to break back above the channel line. The 4 day MA on the NYADV issues is now trending down, as the decliners are at 1.8:1 over advancers.

6 comments:

  1. Nice work Michael, let's see if we can't bring it to its knees on Monday.

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  2. hi columbia!
    portefeuille

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  3. my alternative to your little red dashed line in the 5th chart is my little green trend line (-> http://farm3.static.flickr.com/2783/4081526596_f72a927135_o.png).

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  4. Thank you so much for sharing your knowledge and experience...helping the new trader perserve capital.

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  5. great charts and commentary -

    and really glad you put the links to phil's stock world and steve at ew, both have great info -

    thanks so much!

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  6. The STO is misleading indicator to use with the MO! :) You know very well that your last green line should be pushed one day later than you posted because the STO didn't give a buy signal until the next day.

    I know you were "projecting" and "expecting" the positive turn but expecting something to happen and a signal confirmation happens are two different things. You don't make a decision ahead of the signal because simply things can go down or up further than you can expect or project. So, if we move the STO one day further than your current one, you will see that the gain is void rendering the move from the STO buy signal until now "unreliable". Beside you have to acknowledge the whipsaw that occurred AFTER the buy signal, which will force a trader to exit seeing the hard selling occurred after the buy signal was rendered and confirmed.

    I also know that you use this signal to find turns in the market among many indicators you use but if you carefully analyze the chart you will see this is a common occurrence more than you can depend on to make trades with high reliability.

    All the above doesn't take away from your thinking, I just wanted to add my thinking so we can continue the conversation we had in the chat room. :) SYL

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