JULY 22 INDEX UPDATE
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SHORT-TERM TECHNICAL READINGS:
DOW - LOWER MIDRANGE/BORDERLINE OVERSOLD
SPX - BORDERLINE CLASS 1 BUY SIGNAL
OEX - OVERSOLD REGION
NAZ - OVERSOLD REGION
NDX - LOWER MIDRANGE/BORDERLINE OVERSOLD
VIX - 21.47, borderline CLASS 2 BUY(inverse to market)
CBOE PUT:CALL RATIO - .59
5 DAY TRIN - 5.67
If the market continues down I would get CLASS 1 BUY SIGNAL across the board in 1-2 days, so the short-term bottom should arrive MON/TUE.
An important issue that occured last week was the weakness in the SOX(semiconductors), which broke the UPWARD TRENDLINE(from MAY LOWs) and the BEARISH WEDGE to the DOWNSIDE. As mentioned previously, I feel that the key to this rally in the HiTECHs will be relying on how the SOX does; therefore in light of the weakness in the SOX I feel that the forth coming rally in the HiTECHs may not be strong enough to set HIGHER HIGHs. The NDX is currently still trading within the BEARISH WEDGE and the UPPER trendline of this WEDGE is around 4100 for next week.
The NAZ/NDX/SPX/OEX are all on or CLOSE to their UPWARD TRENDLINEs from the MAY LOWs. Here are the junctions of such trendlines:
NDX - For MONDAY around 3900
NAZ - For this past FRIDAYtoday around 4100, so the NAZ closed on it
SPX - 2 possibilities, for MON either 1480 or 1470
OEX - For MONDAY around 805
Significant breaks of such trendlines would be a significant negative for the market. Keep in mind that those trendlines are also the LOWER TRENDLINE of the various BEARISH WEDGEs.
With the market selling off strongly on FRIDAY the VIX actually went down. I suspect that it may be option related. My short-term technicals also range a CLASS 2 BUY signal, which means that it the market is close to a pivot point for a reversal to the downside - Yep I said downside. So my reading for the VIX are also screwy, and I again suspect it could be related to option expiration.
Previously, I mentioned that I had a CLASS 1 BUY signal on the XAU(per daily/weekly/monthly/quarterly charts), and FRIDAY was the buy-in day.
Firstly, the XAU normally does not respond as quickly to my signals are the major indices, since it is strongly reliant on news and the US DOLLAR. The XAU dropped to 50.75 and the multi-year low is at 48.67, so its only 2 points from the bottom. What is interesting is that GOLD was actually up on FRIDAY and previously produced a HIGHER LOW which is still intact. My mid-term cycle analysis on the XAU varies, regardless the various readings are showing a cycle reversal to the upside from early AUG to early SEPT. I would NOT recommend anyone who is thinking of playing the XAU stocks to play it for the short-term. One needs to look out at least a few months and should be viewed as a longer term play. I added to my position with JAN 2002 LEAPs. |
