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Thursday, August 12, 2010

"It's Dead, Jim"

One thing today accomplished is crystallizing 1088 as the ultimate pivot point for the range we are in, which just happens to extend from 1056 on the downside, to 1020 on the upside, a peverse kind of symmetry which, in hindsight, is pretty easy to pick out. Unfortuantely the latest carnage has put us back into moving average hell, as today, we bounced off the simple 50dma (not on this chart). It appears the momentum indicators have rversed, so the rally we have been in for over a month is now toast, and they have enough room to move t inflict plenty more pain. The move off the big gap down, however, does indicate the dp buyers haven't given up yet, so a decent bounce is not out of the picture here.

CSCO was the big mover in the Nasdaq 100, although this has been weak for some time now. The gap on this was hughe, just begging for dip buyers to come in, and they ran it right into the pivot point and nearly filled the gap.

The Russell 2000 hung in there all day, but overall is incredibly weak right now. The bright side is the MACD histogram has gone so strongly negative so fast that we could get a pretty decent bounce in here somewhere, but wven getting back to where we opened yesterday will be a tough chore. If there is no bounce, we are going to be in real trouble if we break that lower line.

This is a year of the Nasdaq new high-new lows, with a line drawn at (as best I can determine) the zero line.At least for the past year, anytime this dipped below zero is has been a buy signal. However, this correction has been much more severe than any other in the past year, and we went negative for quite some time, at which point it reversed; poking up above zero was a short signal. It is below zero again, so I will have to watch it to see if we reverse sharply here or go lower. Go lower and we are still in correction mode.

his is the same indicator for the NYSE, which also rarely goes negative. This one went positivie in early July (about the time we had the follow through day), and has stayed there since. This also reinforces the relative strength of The NYSE stocks over the Nasdaq, which is normally not a bullish situation, but that could be changing. This is now just above zero, and may dip below it again, which, if recent history is a guide, is a buy signal.

The unemployment claims numbers, along with the earnings problems with CSCO (the numbers were actually good, but they have a problem with customers paying on time, now that they are financing their own sales), really sent the market into a tailspin and while the dip buyers came in,it really wasn't that impressive. i don't know if IBD will call it tonight, but for my money I would put the market back in correction mode, which means stops in place and start taking profits.

I will have the new highs update shortly.

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