SEPT 8 INDEX UPDATE
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Short-term technicals readings:
DOW - midrange, DARK CLOUD COVER
SPX - lower midrange, imperfect BEARISH HARAMI
OEX - lower midrange, imperfect BEARISH HARAMI
NAZ - lower midrange, BEARISH HARAMI
NDX - lower midrange, BEARISH HARAMI
VIX - 20.88, midrange, really LONG LEGGED DOJI
PUT:CALL - .47
The DARK CLOUD COVER on the DOW is a good reliable candlestic reversal signal. The HARAMI's are only fair to weak reversal signals.
Since the overall market is in the lower midrange, there is less downside potential than upside potential, and if the market was to continue down I could get a CLASS 1 BUY signal in 2-3 days.
The MAX-PAIN for the OEX is slightly below where the OEX closed yesterday. I have noticed that the average maximum divergence between the OEX and its MAX-PAIN is about 20-25 points, although on a few occassions it has exceed that. So it is still possible to see 20-25 point swings in the OEX.
Expiration week is normally up or flat, so I am suspecting that if selling continues it should end by Mon/Tue, then a small rally for the rest of expiration week. If I am correct that the forthcoming rally is small then the during the week after expiration the selling should intensify. On the other hand, if the forthcoming rally produces HIGHER HIGHs then the selling after expiration should be weak. For now, Im more inclined to go with a small rally with selling intensifying thereafter.
Yesterday the NDX bounced nicely off of the 3800 area support, but the bounce did not break above the previous day's highs, forming a BEARISH HARAMI. The HARAMI is implying that selling could resume today, but keep in mind that Harami are not very reliable.
The PUT:CALL RATIO dropped back down to .47, which is back to the bearish region and implying complacency.
As for the VIX, boy that was a huge LONG LEGGED DOJI and Im not sure what to make of it. I am suspecting that it may be implying downside volitility, but not sure. Dont recall seeing such long legs before in the VIX.
So Im not expecting alot of downside for the rest of this short-term downswing, and the KEY will be the strength of the forthcoming ralley. If it is weak, the the selling should intensify thereafter(after expiration).
seeya |
