AUG 4 INDEX UPDATE
---------------------
SHORT-TERM TECHNICAL READINGS:
DOW - CLASS 2 SELL/ BORDERLINE CLASS 1 SELL
SPX - BORDERLINE CLASS 2 SELL
OEX - OVERBOUGHT REGION
NDX - upper midrange
NAZ - upper midrange
SOX - lower midrange
BKX - CLASS 1 SELL
VIX - 21.58, CLASS 2 BUY signal(inverse to market)
5 DAY TRIN - 4.49
CAUTION FLAG is STILL FLYING!!!
As mentioned previously concerning the NDX, I mentioned the PATTERN where FLATNESS is followed by a SPURT to the upside, then followed by a selloff that could be large. So could today qualify for the UP-SPIRT.
Intraday the NDX got as high as 3715, which is also the FIBONACCI 50% REBOUND LEVEL of the recent selloff from 4089 to 3342. The FIB 62% level is at 3805. Although the NAZ closed positive by 27 points, the NDX closed slightly negative, but more importantly the NDX closed almost 100 points off the intraday highs, which I doubt the media would high-light since they are focusing on how bullish the BANK/FINANCIAL STOCKs(BKX/XBD) were today.
In light the CLASS SELL signals in the DOW and SPX sectors, I am suspecting a short-term top could arrive in the MONDAY/TUESDAY timeframe. If the overall market is up on MONDAY, I would get firm CLASS 1 SELL signals for the DOW and SPX sectors, with the window for the short-term top until TUE's highs. Please note that the BKX and XBD(financials) are already CLASS 1 SELL signals.
I follow the VIX very closely and apply my short-term technicals to is.
The VIX now has a CLASS 2 BUY SIGNAL(inverse to market), and just as important it gave a SHOOTING STAR, which is a fairly reliable reversal signal. Of the last 10 SHOOTING STARS in the VIX, the VIX was up the following day to start a rally in the VIX. After these SHOOTING STARs in the VIX the SPX started a selloff within 1-2 days and in some cases immediately. Here are the dates of the last 10 SHOOTING STARS:
12/3, 1/7, 1/14, 2/4, 2/8, 3/3, 3/22, 4/7, 5/1, 6/1. In light of the SHOOTING STAR and the CLASS 2 BUY SIGNAL(inverse to market), such is strongly hinting of a SHORT-TERM TOP within 1-2 days, which is also lining up nicely with the OVERBOUGHT/CLASS SELL signals in the various indices.
The 5-DAY TRIN closed at 4.49 which is approaching the SELL TERRITORY which is 4.00. Such is also lining up with the the CLASS SELL signals/overbought readings in the indices.
In light of the above, the environment is lining up nicely for a short-term top in the MON/TUE timeframe.
Prior to the last selloff when the NDX was in the 4000 region, the
SOX started lagging the NDX and eventually went negative. Thereafter the NAZ/NDX follow the SOX to the DOWNSIDE and the NDX sold off about 750 points in 10 days. Well, with the NAZ positive, the SOX was down 29 points. Is it doing it again? LOOKS POSSIBLE!!
Although theres alot of negatives for the HiTECHs some DOW sectors are doing much better, such as the financials. In light of such, I would not be surprised to see signs of EXTREME SECTOR ROTATION where money continues to flow out of the HiTECHs into the DOW/some DOW SECTORS.
In light of the bullishness in the financials, I would not be surprise if Monday gapped up at the open, but on the other hand I would not be surprised of a gap down in light of the negatives in the HiTECHS. |
