SEPT 27 INDEX UPDATE
--------------------------
Short-term technical readings:
DOW - lower midrange
SPX - lower midrange
OEX - CLASS 2 BUY SIGNAL
NAZ - lower midrange
NDX - lower midrange
SOX - CLASS 1 BUY SIGNAL, INVERTED HAMMER
VIX - 25, upper midrange
PUT:CALL - .57
Per my short-term technicals, the overall market is in the lower midrange, but is very close to the oversold region. Although there is a possibility for a rally to start from here, it is less likely. If we do get an up day, I suspect that it is just some sort of ZIG-ZAGGING/SECTOR ROTATION, before selling resumes and creates a short-term bottom.
One indicator I use is giving a slight hint that we may be also be approaching not just a short-term bottom, but a more significant bottom. There should be more downside, after some possible zig-zags, and could produce lower lows, but NOT alot lower. Something like a double bottom with the second bottom being slightly lower. Please keep in mind that such indicator needs further confirmation, but it is the first hint. As for the timeframe of this indicator, the lead time could be from a few days to a week, so towards the end of this week/next week.
The SOX is on a CLASS 1 BUY signal, but the NAZ and NDX has more potential downside. Not that the NAZ/NDX cannot go down further, but I suspect that the SOX will start to gain strength and help the NAZ/NDX from going ALOT lower. If the NAZ/NDX continues down the SOX should lag the NAZ/NDX to the downside, showing some signs of strength. This is also in line with that indicator which is hinting a more important bottom.
On the negative side the OEX did break below last weeks lows to produce a LOWER LOW on a intraday and closing basis. The DOW produce a LOWER LOW on a CLOSING BASIS yesterday, but not on a intraday basis. The SPX is only a few points away from producing lower lows.
Right now I am 80% in cash and my mutual fund account is around 3:2 biased to the short-side. I am preparing to go long over the next few days/next week. Although Im not expecting it, but a washout to the downside would make it easier to go long. Of course I need further confirmation of that indicator and market of not just a more important bottom than just a short-term bottom. |
