GM Thursday

Yesterday's weak bounce turned into a rout today for any bears who were emboldened by yesterday's action. Although we did have a few sparks in the market (unemployment claims improved, and the GM IPO was a spectacular success for the HFT's that were flipping it several times today) and the result may have been a mini short squeeze. However, before the bulls get too cocky, notice that we went right up to the pivot point at 1200 and pulled back, proving it to be a point of resistance. We did not quite touch to 50dma (both simple and exponential averages are now about in the same place), which possibly means we will head there again. Momentum is still downwards, although another day like today will change that.

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Like the Nasdaq composite, the range lines on the Nasdaq 100 do not quite line up with chart support, but it is close. Momentum here looks closer to turning than it does on the SPX. but until we get through the pivot point on a closing basis, I am going to be a skeptic.

Holy smoke, look how nicely the lines on the Dow fit in. The touched the 50dema almost to the penny. This may be the chart to watch for the next few days, as it may be the one the program traders are now keyin off of.

there are lots of ways to measure market internals, but this one is becoming my favorite. it is the percentage of stocks on the nasdaq above the 50dma. There are three levels to watch here (plus or minus a couple of points): 30, below which the market is most likely in correction mode; 50, above which the market is most likely in rally mode; and 70, above which the market is close to topping. The zone in between 30 and 50 is a transition zone, and morre than a day orr two in that zone likely indicates a trend change. The reason I like it is that it is a percentage, so the numbers won't change much over time. Notice that in this pullback we never dropped below 50, so we can assume that this is a nominal pullback for now until proven otherwise.

The presence of ETF's and closed end funds on the NYSE might skew the numbers here a little, so you could porobably ome up with a fudge factor here, but the principle is the same. Here, too, there is no indication of an imminent collapse.

So far, it appears that all this is, is a pullback to the 50dma. Yesterday might have sucked in a few bears who got squeezed today. tomorrow we'll see another test as the indexes come up to the pivot points of their current ranges. Oddly enough, there are no economic releases tomorrow, so we may be at the mercy of the Forex market.

I will have the new highs update shortly.