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Thursday, November 14, 2013

Bearish Indicators, Bullish Action

It now appears we are going to head for R1: I won;t declare myself wrong until we get there, then see what happens. Not that I won't admit I blew the call, but indications other than price are still bearish. So, if we get to R1, fail there, and head down, then I will give myself half a pat on the back. If not, and we keep going, well, I don't even want to think about that.

The Nasdaq 100 has quite a bit of catching up to do, but it appears it might give it a good try. It did well today, even in the face of one of it's biggest components getting creamed on earnings (that also accounts fr the volume today).
If anything, the Russell 2000 is falling further behind, and is hitting fierce resistance here. This is bearish indicator number one.

The percentage of stocks above the 50dma on the NYSE never crossed the all imnportant 55 level, got a bounce, and may be looking o go higher here. Unfortunately, it most likely means we are no done going down, and the only way we can really be sure we are out of danger is for this to get back above 75.  Bearish indicator number 2.

The same indicaor on the Nasdaq, with almost precisely the same story. Is it possible these are done going down? Yes. Is it likely? Not even remotely. Historically, this is very typical behavior of a market that is headed into a correction. Bearish indicator number 3.

All indications are still bearish except for one, and it is the most important one, price. Unfortunately in a market like this, careful stock picking is he only way to go: a lot of stocks are going to be whipsawing like crazy, and fewer and fewer will be trending. The safest position right now is going to be mostly cash, as we wait to see if the market makes up it's mind.

I will have he new highs update shortly.

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