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Thursday, December 18, 2008

Clear As Mud

It looked like we were in a narrow trading range between the 50dma and resistance at 918, but the afternoon news took us down (GE giving lowered guidance, I believe). We are still well above the previous low (just under 850), and i don't expect a lot of volume for the rest of the year. The rally, such as it is, is still intact.

The Nasdaq could not get above it's 50dma, and is now sitting just above a support at 1542. Light volume here minimized the damage.

The Russell 2000 finished just 2 points below the 50dma, and quite substantially outperformed today. Looking at the SPX and Nasdaq, I would say that the rally is in danger of failure, but looking at the Russell, it looks much healthier. The market's direction is about as clear as mud.

I was thinking about what market internals I could look at today, and thought of the number of 52 week lows and what it can tell you. One thing that sticks out about the NYSE is that during rallies, the number of new lows never exceeds 100, and when the number does go above 100, the market is turning. Spikes above 1000 usually indicate short term bottoms.

The Nasdaq isn't quite as clear, going above 100 3 times during the March through May rally, but spikes above 1000 seem to indicate imminent reversals. This is only one year, some weekend I may do an extended study on this to see if there actually is something to this.

I didn't bother with the treasuries charts today, they are all in uncharted territory and any effort to try to figure out support, resistance, or trend is just plain hopeless.

I had RICK scheduled to report today, but there is no news on it. I will have new highs posted shortly.

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