One thing that was accomplished today: we established the 50dema as the average that the computer traders are going to be trading off, as once we hit it, it as time to sell. The really appears to hve run out of steam here, and we are either due for a small pullback, or another big leg down, and at this point it is just about impossible to tell (I heard an elliot wave "expert" today that gave so many alternative wave counts, no matter what happens he is going to be right). Until we can see how far down this one goes, I would not be adding to any positions here (and definitely not initiating new ones), but unless stops are hit, I'm not in hurry to sell, either.
The Nasdaq 100 actually did get above the 50dema yesterday, but you can see that each move up was greeted with some pretty strong selling. This has run out of momentum as well, and appears to be headed down, but again, to unknown depths.
From big caps to mega caps, the Dow industrials did the same thing. We have already established a pattern of higher lows, and now we need to see if theis next drop confirms that. If it does, I think I will be buying with both hands.
The percentage of stocks on the Nasdaq is still well into bear market territory, which isn't a suprise, as some serious damage was done in the first leg of the correction. It has been strengthening slowly since then, as it should, and by the time it gets back above 30, if it does, the market will be in much better shape than today. Above 50, and we are in bull mode again, but I think we are several months away from that.
Here is the same indicator on the NYSE. One thing I noticed is the ATR on both, which is dropping tp very low levels. In a stock chart that is usually conducive to a slow, steady move up, and that is probably the same case here as well. Time will tell.
It appears the first leg of the rally is over. So far there is no real distribution showing up, so this pullback may be nominal and lead to another leg up. The trouble is, net week the big boys are back from vacation, and they may see this last rally as a golden selling opportunity. All we can do is wait.
I will have the new highs update shortly.
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