DEC 16 INDEX UPDATE
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Short-term technical readings:
DOW - oversold
SPX - BORDERLINE CLASS 1 BUY(intraday), OVERBOUGHT(closing basis)
OEX - BORDERLINE CLASS 1 BUY(intraday), OVERBOUGHT(closing basis)
NAZ - BORDERLINE CLASS 1 BUY(intraday), OVERBOUGHT(closing basis), SHOOTING STAR
NDX - BORDERLINE CLASS 1 BUY(intraday), OVERBOUGHT(closing basis), SHOOTING STAR
CBOE PUT:CALL RATIO .94
VIX - 31.15, overbought(inverse to market)
NAZ NEW LOWs - 319
Per my short-term technicals, the overall market is in the overbought/ClASS BUY region, and if the market continues down on MONDAY, I would probably get firm CLASS 1 BUY signals with the window until TUEs LOWs. The PUT:CALL RATIO got to .94, which is a short-term buy territory. So it is lining up with my short-term technicals.
As negative as the market appears to be, there were some positives I noticed in the NAZ.
1) The NDX got as low as 2511, which is only 85 points higher than the previous trough of 2426, but the NAZ NEW LOWs were only 319 when at the previous trough it got to the 800 region. If this continues, I would consider it as a significant POSITIVE DIVERGENCE
2) Over the last few days the SOX and BTK has been lagging the NAZ/NDX to the downside on a relative to the recent runup. I would also consider that as being a positive since the SOX has been leading the NAZ/NDX over several months
3) SHOOTING STARs were formed with yesterdays gap, which are reversal signals but require confirmation. Lets see for those SHOOTING STARS can morph into more significant candlestic reversal signals like a MORNING STAR or ABANDONED BABY.
If Friday was the short-term bottom in the NAZ/NDX, that would be the 1st significant postive we have seen in a long time, since that would mean that the NAZ/NDX formed a HIGHER LOW. So lets see if the NDX can stay above 2426 next week, which is quite possible in light of the positives mentioned above. If the NAZ/NDX does set a HIGHER LOW I would still not get overly bullish, since to change the short-term trend it would still need to produce a local HIGHER HIGH, otherwise it could be starting to form a bearish chart formation like a BEAR FLAG/WEDGE/TRIANGlE/DUMPLING. So if a HIGER LOW is set, I would not yet get overly bullish and call it a DOUBLE BOTTOM yet in terms of producing a significant rally, until it can also set a HIGHER HIGH - just being cautious and remembering the old saying - THE TREND is YOUR FRIEND.
Although Im not not bearish short-term on the NAZ, the SPX did give a significant negative signal which was an "IDENTICAL 3 BLACK CROWs". Some may argue that the SPX was not a 3-CROWs since the candles were not of equal length. My position is that it the candles got relatively larger without the subsequent day being more than double. There is a problem with a 3=CROWs on the SPX and that is that the SPX normally does not show the gaps since the all the individual issues do not open at the same time. Regardless, its still an important negative.
As mentioned previously, it is not uncommon that after the 3-CROWs is formed that a short-term rally follows before the selling resumes/intensifies. I have mixed feelings as to how long this short-term rally could last. It could just last a few days or last until early JAN. If the NEWs from the FOMC meeting is good, this rally could last until early JAN, but if the results are viewed negatively, then this forthcoming rally could be very short.
Previously, I mentioned that I felt that the DOW could start to intensify its downside move while the NAZ may not do as bad. This 3-CROWs on the SPX combined with the positive developements on the NAZ/NDX, may be hints to support such belief. So if the SPX declines further but the NAZ/NDX does not decline at the same rate, then that would imply that the DOW would be the weaker link. Im not saying that the NAZ cannot head lower, just that if it does the downside is more limited than the DOW's. And even with the 3-CROWs on the SPX, it is still possible for just a successful retest of the previous lows in the NAZ/NDX.
Thanks for the well wishes for my mother. Sorry, I wont be able to respond to individual posts and should be back to normal posting by Thurs. |
