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Wednesday, November 20, 2013

Not There Yet

 While I have been pounding the table saying a correction is coming, it's not here yet, at least as the Elder Impulse charts tells us. We are still in a cluster of blue bars, and even a red sell signal will not be considered a correction signal; the market is still in a technical up trend, and until proven otherwise, a sell signal shoulfd be considered a buy point. At some point we will get a valid sell signal, and it may come now, but it will be a couple of days before we know for sure.

The Nasdaq has a sell signal, and so far, it is starting to look valid. We are a a support level now; a break of that level will go a long way toward pushing the rest of the market into a correction. Volume is low on the way down, so the bears don;t have much fuel here, and un less it picks up, this will peter out soon.

The NYSE composite has finally sopped it's freee fall in price relative; it is unclear whether that is bullish or bearish. The price relative here started moving down about the time that treasury yields started moving up. That ould be logical, since most of the interest rate sensitive areas of the market are here. If that is the case, then the market may be anticipating that interest rates are going to stall here.

Ticker Relative Strength Index (14)
XLV 67.21
XLF 60.68
XLI 59.93
XLP 57.97
XLK 56.68
XLY 55.67
XLE 54.37
XLB 53.71
XLU 46.73

Here are the sectors ranked by RSI. It is unclear whether the market is going defensive: the most defensive sector is on last place, but it is also the most interest rate sensitive. Despite the Obamacare debacle (or maybe because of it), XLV has moved into the lead, and that is at least somewhat defensive.

Here is XLV, which, over the last few months, has performed about evenly with the market, but short term, is making a big move in price relative. It is up against resistance, so swe will watch this for a breakout. This could move up while the rest of the market is moving down.

XLU continues in last place, price relative has broken down again, and this failed at long term resistance. This buy signal will probably turn out to be valid, but be cautious, the 50dma looms just below.

The market is inching toward a correction, but it's not yet there, and it is still in question as to wheher this will be a correction or just another in a long series of pull backs. Unfortunately, right now, we have no way of knowing.

I will have the new highs update shortly.

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