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Friday, November 11, 2011

Friday Weekly Charts

We had quite an impressive move today, but not quite impressive enough to get to the previous high, let alone the high before that. if this is establishing a pattern of lower highs, that will result in a pennant formation, which would normally be bullish. the fact that we are also going to higher lows seems to re-inforce that. We will have to sit and wait for the pattern to resolve itself. I have put the standard pivot points on this chart: notice that we have stayed above the middle pivot point and have not come close to testing R1. I don;t know what the probability is that we will test it before the month is over, but I suspect we will.
 The weekly chart indicates that, although the stochastics are still going up, they are close to reaching overbought, and that the 40 week average is now putting up resistance. A break of that will probably bring a flood of buyers, but another failure might be a trigger for a sell off. I included CMF this week to see how we are doing there: it is still quite low, which means we could have a ways to go on it. Oddly enough, peaking CMF is not a very good indicator of a drop coming: the last two major peaks came right in the middle of very long up trends. It seems it may be that the big money is what moves the market in the early stages of a rally, but in the latter it is the small traders. By the time the big selling stars, CMF has almost dropped back to zero.
Not a very reliable indicator.

The Nasdaq is also having trouble at the 40 week line, and is down for the week, at least marginally. It does, however, have momentum to the upside still, and better CMF than the SPX. If the big money is going on here, they have done a pretty good job of hiding it, and the momentum crowd has not started buying yet. Again, not much to do here but wait.

The Dow is still the strongest of the indexes, a least in the fact that it has broken through the 40 week line and held it. It does not, in other respects, look substantially different from the SPX or Nasdaq, and is more easily manipulated (according to O'Neil, not me) so I don't get too bullish about this one leading.

The transports are really struggling here, and may have trouble holding a descending 40 week line. A failure here will be quite bearish, and the rest of the market will likely follow. 

The Russell 2000 can't even get up to the 40 week line, let alone test it. This should have been screaming higher coming off the October low, but has barely kept pace with the rest of the market. It is staying in the upper half of the range it I on since breaking back above the mid point, so all is not hopeless here.

The market is absurdly news sensitive right now, and is at a point where it can basically go either way. I am still holding postions i got into when we had the follow through day a while back, but I;m not looking to add anything until we get some resolution. that may take a while.

I will have the new high update shortly.

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