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Thursday, February 3, 2011

Wednesday, After the Close!!!

The Dow made another new high today, while the Transports continue to diverge and hover around the lows.
The Dollar did pick a bid up today, and the indicators are starting to look more bull-friendly, however, the buck needs to follow-thru tomorrow.
The VIX lost support of the 20 day MA today, if the VIX starts breaking below the previous lows, then the SPX would have room to run to the upside, and the building bullish divergence on the VIX would be lost. The lower Bollinger band is now down at 15.09, which would be making a NEW low on the VIX.
The move up from 1275.10 to 1308.86 really leaves the door open to two different interpretation's for the count, was it a complete five wave move, or just three waves, if it was a full five waves up the best option would be the 1-2 up count, and if was only three waves up, then this morning's sell-off would be the 4th wave squiggle with the 5th currently in progress. To top it off, market internals today were now much of a help, mainly ending flat with Breadth closing at 1.18:1, advancers, on 997M shares traded on the NYSE. It is note-worthy that the advance this afternoon was stopped by the resistance of the median channel line. The Trend Finder II, which has already been updated, is also producing very weak signals, and whip-sawing. This is normally caused by very weak momentum coming from both the Bulls and Bears. The Markets need to break-out of this range and have some follow-thru days, something that has been absent for the last two weeks. There is a small chance we could be in a large running 4th wave, but until we can get true direction, the over-all trend does remain up on the SPX. The Russell and the Dow Transports have gone two weeks with-out making new highs, and both have made minor lower lows, so over-all, the equities seem more likely to be in a topping phase, so for now, being neutral is probably the wisest decision.

1 comment:

  1. Michael,
    Indeed the DXY held the low end of that trendline. A real interesting juncture here in currency land that will have big implications I believe: http://marketletters.blogspot.com/

    ReplyDelete