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Monday, May 2, 2011

The Short Lived Bin Laden Rally

Whenever we encounter a bit of resistance, especially after a big up trend, I like to try to imagine it as a pivot point, then try to find other pivot points and see if they fit. In this case they don't, which could mean that this is a one day wonder in terms of pullbacks. The trouble is, this method has no actual basis in reality, so I may be totally off base, but with the market in new territory (at least for the last year), I don't know any other way to try to anticipate trend changes in the market. Like it or not, we are just going to have to wait to see if this amount to anything. With volume dropping off the way it did today, the probability is it won't.

 The Nasdaq, on the other hand, has quite a bit more bearish a tone here, with a pretty big engulfing candle, and nasty reversal after hitting a new high, and a bit higher relative volume. The price relative took a nasty drop as well, but the up trend is still intact. you can make a case for a market top much better here than the SPX, but not by much.

It looks like the relative strength of the Dow industrials has returned with a vengeance.  Whether this is bullish or bearish is debatable, but in the recent past it was bearish. 

Ouch, this is ugly. This one looks like a serious reversal. The price relative line took a big hit today, and while it is not yet trending down, it has weakened signifcantly. The real trouble here is that it broke through the previous high, and is now back into it's old trading range. While that isn't a "jump off the breidge" moment, it can't be very good, either.

The market took off on a significant rally this morning on the news that Osama Bin Laden was killed, but reversed, and pretty nastily for no reason i could find. I was, however, picking up several blog posts which were baically claiming the Bin Laden killing was faked. I am not a fan of President Obama, but as far as I am concerned, accusing him of faking Bin Laden's death, based on zero evidence, is over the top. But over the top seems to be a way of life in politics today.

I will have the new highs update shortly.

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