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Thursday, November 21, 2013

The Russell Take The Lead... For Now

For a bounce, we got a pretty good move today, and pretty good volume as well. We have a week left in he month, and today just about killed the likely hood of a drop down to the P pivot point; now, it looks more like another test of R1. Big bounced are typical of corrections, but this one comes after a very small drop, and it could be that that is about all the bears can muster right now. If so, we are in for another rally, as after next week we will be in the infamous :"Santa Clause rally" time.

The Nasdaq 100 didn't quite get the move the SPX made, and on a relative basis, did no get the volume, either, The jury is still out as to whether this is a bounce before a move down, or the start of a move up, but judging by this, it looks like the former is more likely. Overall, this looks too weak to sustain a major up move.

The Russell 2000 made a nice move today, but is still in a short term down trend. This will probably be the determining factor in what the market is going to do next, so this will be the one I watch most closely.

Here is the percentage of stocks on the NYSE above the 50dma, which has not been as reliable this year as it has in the past, but is still the most reliable indicator I have seen in the last few years. This is elling us we are still in danger of a correction, for a couple of reason: 1) it is still moving down; and 2) it has not hit a level low enough to have bottomed out. So, the probability here is that we are still entering a correction.

his is the same indicator on the Nasdaq, which muddies the water just a bot. It has also not hit a level low enough t be a bottom, but the most recent low was higher than the prior low, putting it in a short term up trend. While the probability here is still that we are going lower, it is increasingly possible that we are not.

The bounce we would expect came a little sooner and a lot stronger than expected, and may have been enough to quash any coming correction. The market is not out of the woods, but it may be finding a way out now.

I will have the new highs update shortly.

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