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Tuesday, July 13, 2010

Upside Surprise

Yesterday I posted charts with exponential moving averages, today, I have both simple and exponential 200 day averages, as they bith seem to be coming into play. Unfortunately, on the SPX, we can;t really tell which one is in play, as today the simple 50 crossed the exponential 200, and price stopped dead right there. So we will have to wait to see if we get rejected by the 50, or go up to test the simple 200. Damn, this is getting complicated. At least we did get some volume today, and may see more as earnings season progresses. So far, so good, as first AA an next INTC both posted beats.

The Nasdaq is getting it's death cross of the simple averages now, and that stopped price today. I thought the top of the gap, along with the 200dema, would be stiff resistance, but not a chance, it blew right through it today. We have the descending 50 and trend line to contend with now, but volume is one the way up, and with INTC, up 7% after hours, is any indication, this will probably make mincemeat of those barriers as well.

If the question on the Russell was which 200 day average would come into play, it was put to rest today; it blew through both of them. The price relative line looks like it is going to change trend; if it does, rally time.

Looking at the new highs on the Nasdaq, you can see how much damage was done during this correction. 30 seems to be an important level here; in the past year, every dip in the market lead to a short drop below 30, but a prompt reversal came soon after. In tjhis correction the opposite happened. We dropped below 30 and only briefly got above it before coming back down. It is ow at 31, right on the cusp.

This one is a little surprising. The NYSE new highs has a "line of death" ath about 40. It did drop to a one year low at the start of this correction, but is back above 40 and rising. It may be the NYSE composite that will lead out of this correction, if indeed it is coming out of it now, not at all a sure thing at this point.

I will have the new highs update shortly.

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