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Monday, March 8, 2010

Monday updates

After the close, We made a higher high today, with-out any lower lows, so the short-term trend remains bullish. I posted a chart of the New York Stock Exchange (NYSE) because I wanted to give an unbiased look at the markets, after posting the Russell earlier, which has had the most bullish looking rally, and I have counted out as an impulsive wave up, the NYSE, has the weakest looking rally, with a corrective count that fits much better.
On the NYSE I just do not see anything that resembles a 3rd wave up, no large gaps, or strong impulsive waves present. Leaving the option that we still have not seen a 3rd wave up and all these over-lapping waves are part of a series of 1-2's up, or it is a large corrective rally that no one in their right mind could of predicted the count ahead of time.
I hear, and also feel the frustration of having to change the counts on the SPX every few days, but with all the over-lapping corrective waves it is just impossible to have known what the count was going to turn out to be two weeks ago, but like I have been repeating day after day, the trend remains up until we start making lower lows.
The reason I have kept the SPX in a corrective count is because of the above chart, and until the SPX makes a new high above 1150, I will keep the corrective count. I see no reason why we can not have the individual indexes in separate counts, it is very common occurrence to see this with the market at major turning points. It is very obvious that the market is not firing on all cylinders, and a long-term sustainable bull market can not exist with-out all indexes firing together.
Today the market was stuck in what best can be described as a 4th wave of consolidation, with higher highs likely tomorrow after some of the short-term over-bought conditions were able to get burn off.
Breadth for the day ended at 1.43:1, advancers on very low volume, I still do not have the updated volume numbers after the close, but the SPY had the lowest volume of the year. This is ridiculous to have a market rallying with volume numbers this low and still declining and call it a sustainable rally. I sure hope that anyone that has gone long in this rally has a good trailing stop going, because when the bottom falls out, it could be violent if the volume explodes to the up-side.

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11:27, The bands are tighting up aging, should get a good move here very soon.


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8:21, The Russell is getting at extremes now, in what appears to be an extended 5th, I have looked at the 1-2, 1-2, up, option a few people have mentioned in the comment section and just do not see the technicals supporting that theory, we are way too over-bought to even think about starting a 3rd wave up.
This was an interesting development this morning, while the SPX was making higher highs, the over-all number of individual stocks making new highs declined close to 30% from the high on Friday, from a high of 447, down to only 309. This could be a very important early sign that the rally is getting really weak, with less stocks participating and making new highs.


7:18, The long-term VIX chart, on a weekly time scale has support at 16.08, followed by 15.82, also of note, the RSI is diverging.

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6:53, The SPX made a higher high on the open, but with no unfilled gaps for the day. The trend remains up, until we start maker lower lows. Breaking below 1133, would be the first sign that the current up trend is in jeopardy. An interesting side note, if we close in the green today, that would be seven straight green closes, a feat last accomplished all the way back in October '06.

3 comments:

  1. Mike on the subject of volume (and cash levels in equity mutual funds):

    http://www.zerohedge.com/article/spy-volume-back-2010-lows-equity-mutual-funds-run-out-cash

    "The last time stock managers held such a small proportion (of cash) was September 2007, a month before the S&P 500 began a 57% drop, according to data compiled by Bloomberg."

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  2. SPX seems very likely to reach the 1150 area to complete wave 'A' of a rising ED.

    Wave 'B' of the ED should generate a drop to at least overlap the activity in the 1110 area.

    Sorry to remain bullish, but after wave 'B' the market is likely to rise to at least 1200 in waves 'C', 'D' and 'E' and possibly as high as 1400 if wave 'E' overshoots.

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  3. Very nice market research!
    If VIX breaks 15.82, and every single EWaver like me became a bull, then the market is ready to collapse:)

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