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Wednesday, March 20, 2013

Bernanke Speaks...Market Snores

You wouldn't know today was an FOMC day by looking at the chart: there was basically no reaction bu the market, and why would it, with the FOMC saying the same thing over and over. Bernanke dares not tamper with the monster bull market he has created, inflation and unemployment be damned, On the Elder impulse chart, we now have a cluster of blue bars, and that could be a warning of an imminent trend change, but with the way this market is going, I would not bet on it. I will be watching for a sell signal, and if it fails to follow through, we know we have another false alarm and another leg up to go. Until then, we wait.

For the second day in a row the Nasdaq has slightly out performed, which may be an end to the down trend in price relative, although that is a very early call. Volume wise, today was no great shakes, but since we never enetered a correction, we are not waiting for a follow through day.

The NYSE composite actually did flash sell signal yesterday, but did not follow through today. Until it does I am going to assume it is a false alarm. I have no idea why this chart does not have today's volume, but I do suspect it was low.

Ticker Relative Strength Index (14)
XLP 74.79
XLU 74.24
XLV 70.02
XLK 62.39
XLF 62.05
XLY 61.74
XLI 61.44
XLB 58.93
XLE 55.14

Here are the sectors ranked by RSI. We still have 3 over 70 (down from 4 last week), and still have the defensive sectors leading. This has "correction coming" written all over it, but it's not going to tell us when.

XLP is still in the lead, Right up until yesterday the price relative was dropping like a rock, indicating a very bullish condition, but the last two days it has shot up, which should not be happening unless the market is going defensive.

XLE has been plummeting in price relative (but not price) since mid February. The forst reaction might be "rotation", and it could be, but I doubt it. This has also given a sell signal which has not followed through, so we will have to keep an eye on that. A false alarm here will probably start a bull stampede.

My correction call is getting a little frustrating. Ordinarily I would have written today off as a minor bounce in a weak market, and it may prove to be, but I did see a lot of strength in leading areas, so we may have just seen another dip buying opportunity fly by. We are going into the end of month and quarter, so it is quite possible we will see some painting of the tape as the big money biys jockey for position for next quarter.

I will have the new highs update shortly.

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