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Tuesday, February 8, 2011

Tuesday, After the close!!!

The divergence between the Dow, and the Dow Transports is amazing in that it has lasted so long, this is closing in on a full month since the Transports have made a new high. This should be very worrisome to the bulls if the Transports keep trending downward.
A VERY important development in TNX today, it did finally reach the trendline of resistance, then closed above. This is a major inflection point for the Treasuries and possible the over-all economy, if TNX breaks out to the upside, bonds are in serious jeopardy of spiraling downwards. The yield on the 10 year hit 3.73% on this move, and if this continues in the present direction it will be a crushing blow to the already declining housing market. The majority of mortgages are tied to the 10 year bond. BTW, this is a great set-up for a trade!!!
The tightness of the Bollinger Bands on the SPX reached extremes today, a larger move normal follows. In this case most likely the 5th wave of the 3rd up(Blue, in the chart below)
The SPX behaved as expected today, a boring day while the 4th wave traced out. The rest of the week should continue in this pattern if the above wave count is right, lots of consolidation between stair-steps higher toward the 1342 level. 1308.98 is the magic number that can NOT be broken in order to keep this count valid. Today's move was mostly corrective with many over lapping waves.
The market internals were also weak, Breadth was only 1.78:1, with only 885M shares traded on the NYSE. This is incredibly low volume that is normally only seen around the Holiday's. Things are getting very interesting now, with the Bonds at the point of breaking down, and the Trannies not confirming, all mixed with low volume, this market is very fragile and it will not take much for a large sell-off to start the cascading downwards.
The new web-site is very close to being finished with just a few more technical adjustments needed to wrap-up this project. If things continue to go smooth the new blog will become the primary site with-in this week. You can check out the new site here. Please leave any comments or suggestions for new material you might have, and don't be shy, your comments are always appreciated. For the shy ones, you can contact me through E-mail, links are available on both sites.

3 comments:

  1. Great post today. Thanks. And your new site looks swell. Are you going to have Disqus?

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  2. Probably not. I will see how the current comments work out. Disqus can really be a pain in the Butt sometimes.

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  3. Thanks for the $TNX updates Mike. Does $TYX have a similar chart pattern? Have been sitting on a bunch of TMV since the New Year. Jordan

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