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Monday, November 23, 2009

Monday Updates

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Bonus chart, this is one of the charts that I have streaming live everyday, so I can keep track of which indexes are the strongest and which the weakest. As usual the TRAN and the Russell continue to lag behind the DOW and SPX, increasing the gap between them!!
This is something that Anchak brought-up over the week-end. The weakness in the Nikkei. It is a very interesting chart, back in July the $NIKK was the strongest and the $BKX was the first to reach the top of that wave. Now compare them to where they are now, $NIKK the weakest, and the $BKX diverging against the DOW.

After the Bell, This is the count I have going on the SPX and I also see quite a few different possibilities. This count will remain valid until we break above 1113.69, but my confidence is not very high that this is the correct count, just too many options available.
Overall, I still remain bearish and see this rally as only a blip in the bigger picture, nothing changed today that would make me reconsider my mid-long term outlook
The day ended with Breadth at 3.81:1, advancers, again on very light volume.
Numbers to watch would be 1113.69 for the bears, even if this was exceeded I do not believe it would be by much and would represent a great shorting opportunity, and 1086.81, would be for the bulls, breaking below this would help signal this latest rally is over!!
Volume will likely continue to be light and that has the habit of producing exaggerated moves that one should take into consideration!!
9:14, After a gap open this morning, with breadth running above 10:1 advancers on VERY light volume, The Russell has started to sell-off. Still unsure if this is part of the 2nd wave up, or possible another 1-2 in the making. The DOW did manage to make a higher high, The SPX was just shy of making a new high, and the Russell is far away from making a new high. With all the indexes in different phases of the counts it furthers adds to my believe that we are in a major topping process, the market is not rallying as a whole, and that is a warning sign that things are becoming fractured and a major sell-off is approaching!!

I am going to start concentrating more on the Russell charts, besides trading the Russell, it is also acting as the leading index and as it weakens further I expect it to drag the other indexes down.

The RSI is approaching the trendline of resistance and the Full STO on the 60 minute chart, as well as the daily and the 15 minute charts are now all in overbought conditions.

On the SPX, as long as 1113.69 holds, I am keeping my count that this run up was part of a 2nd wave with a sell-off coming very soon. If a new high is made, the count would become part of a 5th wave up to complete the final leg of the rally and the price action last week was part of a large corrective 4th wave.

FWIW, the TRAN has already given up half of the gains from this morning!!
The VIX still looking corrective as it drops and is starting to run low of support, this is very troublesome for the bears. Currently at 21.25 after making a lower low of 21.07 earlier this morning. Small support at 20.35, and some major support at 20.10.

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