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Sunday, October 17, 2010
The Percent of Stocks on the SPX that are above their 50 day moving average is at extremes. The over-laid 10, and 20 day MA are quickly approaching the top. A cross-over usually signifies that a top has already been made on the SPX.
Here is a chart of the weekly McClellan Oscillator, it is a smoother version compared to the daily chart that has been showing lots of whip-sawing lately. Here you can see that the MO has stayed in positive territory during the current rally, but has been trending down. After Friday's close, the weekly reading close in the RED!!
The Goldman Sachs Commodity Index is showing some early signs of a major breakdown, including a picture perfect blow-over top that quickly reversed with two large red candles in a row, a broken uptrend line of support on the RSI, a roll-over on the STO, and my favorite, a negative reading on the 5/35 Histogram. At the 555 level are two points of support from the Fib fans, which if broken opens the door for a run down to test the next Fib line at 536.
The Dollar finally has a large blank candle with some indicators that are showing signs of life for the Buck. Bottoms are normally quick and sharp reversals and the indicators are starting to point to a buy, with the 5/35 already issuing it first buy signal after producing a positive reading .021(red arrow). As always, the Dollar does need a couple of follow-thru days to confirm a new up-trend.
The yields on Treasuries have taken a small break from the rapid sell-off, if the Dollar does catch a bid and the trend reverses it should take yields along for the ride, if investors move from the safety of Treasuries to the Dollar it would start pushing yields higher.
There definitely seems to be a MAJOR turning point approaching the Stock Market, with many signs that the current trend is about to change market wide. This might not happen all at once tomorrow, but with the extreme readings this new trend change should confirm itself this week.