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Monday, February 28, 2011

Strange Behaviour

 The 20dema seemed to the the tesing ground today, after breaking through it at the open we pulled ight back to it, and it began to look like we were going to resume last week's decline, until a bounce off the 20 put us back positive for the day. What was really strange was the behavior of the sectors: normally defensive sectors were leading, and at one point we even had all sectors negative, but the index was positive. That kind of strange behavior is not giving me a lot of confidence that this is over. However, if IBD has us in a correction, then today was day 3 of a rally attempt, and tomorrow we will start looking for a follow through day.

The Nasdaq was painfully weak today, even though it got a positive finish, it was just barely.  The price relative line is in a slow, but steady, down trend, and making a lower low on he next pullback will reflect further weakening. If this weakness continue, it is going to be hard to ake the case that the market is not near a top.

The Dow industrials appear to have reversed a down trend in price relative, which also hurts the bullish case. This was by far the leading index today, and it appeared the main strength was JNJ and PFE, with a little help from HPQ, and nothing else.

The Russell 2000 is kind of in between; not as weak as the Nasdaq, but not quite gaining strength, either. As it passed the midpoint .of the current range, it revesed and headed back down toward it, so it appears we are encountering heavy resistance so far in the top haf of the range. Still, it does not appear to be weakening, either, so for now we can assume it is in ok shape.

Despite a gain on the Dow and SPX, today was not particularly bullish, both in the sectors and in leading stocks. Internally, advancers/decliners showed improvement, and new highs/new lows was good, but the market appears to have some work to do, and the uncertainty in the middle East is not helping any.

I will have the new highs update shortly.

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