SEPT 20 INDEX UPDATE
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Short-term technical readings:
DOW - still a pending CLASS 1 BUY SIGNAL/ NEGATED CLASS 1 BUY SIGNAL
SPX - lower midrange
OEX - lower midrange
NAZ - upper midrange
NDX - just entered overbought region
SOX - just entered overbought region
Two important negative issues occured today:
1) DOW - broke below the TRENDLINE from the MAR LOWS. That junction point of that trendline for today was at 10,725 and the DOW closed at 10688. The "3 BLACK CROWs" were are work today.
2) SPX - On a intraday basis the MAIN TRENDLINE from the OCT 1998 LOWs was pierced to the downside and the SPX closed right on that MAIN TRENDLINE at 1450. The SPX got as low as 1430 and closed at 1451. It was mentioned by Paul that it is common for a pierce of a trendline to be followed through on. Whether the follow-thru comes immediately or after a bounce? Since the DOW did selloff about 830 points it is not out of line to expect a bounce here first before the followthru to the downside if it does occur, which is quite likely.
The MAIN TRENDLINE from the OCT 1998 LOWS for the DOW is right around 10,500. Im eyeballing it from weekly charts so I could be off some. A break below 10,500 is simply NOT GOOD! With the SPX already temporarily piercing its OCT 1998 TRENDLINE to the downside, the negative environment is growing. If the SPX can confirm the break of its trendline to the downside, I will consider that as a major negative for the overall market, and that the DOW should follow suit shortly thereafter.
The NAZ/NDX showed some strength relative to the DOW and SPX, but I dont think it is wise to expect the DOW and SPX to resolve the technical damage immediately just because the NAZ/NDX was stronger today.
Although the SOX was up, it still lagged the NAZ/NDX. If the SOX continues to lag, I will consider that as a hint that the legs in this HiTECH rally is weakening.
The HiTECHs are already approaching/in the overbought region per my short-term technicals. There is still some more upside potential, but not alot. If the the HiTECHs continue up, I would get a CLASS 1 SELL signal in 1-2 days.
Heres a thought, if the DOW does continue to bounce, is it possible that the money could rotate out of the NAZ into the DOW. The market has done the SECTOR ROTATION DANCE often for the last 1 1/2 years. Heck if I know for sure, but I dont think it would be wise to totally ignore that possibility.
I added a small(5%) position in the USPIX(short-NDX). There is a chance that the NAZ could weaken as soon as tomorrow, only a slight chance, so I decided to start legging in on the short side since Im 90% cash.
I will become less BEARISH on the NAZ if the NDX can significantly break above 3850 and stay above 3850. Im not talking about an overshoot but a clear break that is confirmed. That doesnt mean I will become bullish, just less bearish. I will become bullish on the NAZ if the NDX breaks above 4250, since that would produce a more important HIGHER HIGH. |
