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Wednesday, February 9, 2011

Humpday Pullback

I pointed out yesterday that the RSI had gotten over 70, a point at which the market stopped rising and, though they weren't much, pulled bac to get RSI back down a bit. We did that again today, and so far it isn;t much of a pullback. For now we can call 1324 a pivot point, and we will see how long we stay under it, but so far, there is nothing to indicate it might remotely be a top. By the way, we have a blue bar on the Elder impulse system, which, for the last 6 months, has meant nothing.

The Dow is totally ignoring the fact that it is overbought, and continues to march higher. Since there has been no resistance so far, the pivot points I have above are my best guess.

The Russell 2000 is resuming it's laggard status, and pulled back more sharply today. Anything above 810 is putting up fierce resistance. However, sideways trading would be bullish here, and in fact, the Elder impulse system is still on a buy signal, MACD is still rising, and RSI has lots of room to move.

I should start keeping track of the RSI reading I get on the sectors, as for the last 2 weeks, the leading sector the prior week was not the leading sector the next. Last week it was XLB, which is now in the middle of the pack, and XLI has taken the lead. If the pattern continues, this sector will underperform for the next week.

XLU has the lowest RSI, and if the pattern continues, this one will outperform over the next week. It's hard to believe looking at the chart, but we will see.

Today was an overbought pullback until proven otherwise. Despite the divergences that are developing, there really isn't anything indicating an imminent correction.

I will have the new highs update shortlhy.

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