OCT 20 INDEX UPDATE
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Short-term technical indicators:
DOW - midrange
SPX - CLASS 2 SELL SIGNAL
OEX - CLASS 2 SELL SIGNAL
NAZ - CLASS 2 SELL SIGNAL
NDX - CLASS 2 SELL SIGNAL
VIX - 28.17, oversold/borderline CLASS 2 BUY(inverse to market)
CBOE PUT:CALL RATIO - .64
5 DAY TRIN - 4.16
There were bullish developments in the the NAZ/NDX. Both the NAZ/NDX produced HIGHER HIGHs above the previous short-term peaks of last weak. They also closed at or slightly above the TRENDLINE from the early SEPT HIGHS. In light of these recent bullish developments I feel that a MID-TERM(30 days) bottom was set in the NAZ/NDX.
However the verdict is still out as to whether the DOW and SPX has set a firm mid-term bottom. Those strong downspikes which produced significant intraday lower lows could still be tested.
My short-term techincals for the overall market is in the OVERBOUGHT REGION/CLASS 2 SELL territory. If the market continues up I could get CLASS 1 SELL signals as early as tomorrow with the window until MONDAYs highs, so we are nearing a short-term top.
In light of the bullish developments in the NAZ/NDX, I suspect that the pullback in the NAZ/NDX should not strong, and that the forthcoming dip should be bought for a trading long position.
The 5 DAY TRIN is now at 4.16 and nearing the short-term sell territory.
Yesterday the PUT:CALL ratio was around 1 and with the strong rally today alot of the fear has already decline to where the P:C ration is now already around neutral territory. The VIX has also dropped significantly. So the high level of fear yesterday, per the P:C RATIO and VIX has already dropped significantly. I wont say that it is in the overly complacent territory, just that it has dropped significantly.
Although the mid-term developments have been bullish, please keep in mind that significant LOWER LOWs were produced in the DOW and SPX, and that the downtrend in the DOW and SPX is still intact. Until the DOW/SPX can make a minor HIGHER HIGH or HIGHER LOW they should be watched carefull. Again, I would not ignore the possibility of a RETEST of those NEW LOWER LOWS. Please keep in mind that the DOW made a LOWER LOW by about 375 points, not a few points. If it was just a few points(say 50-75) then one could argue that it was just a DOUBLE BOTTOM where the the 2nd trough was slightly lower - 375 points is too much to make that arguement.
So if the DOW does a RETEST of the 9650 region, that could pull the NAZ/NDX some or we could see SECTOR ROTATION from the DOW to the NAZ, where the NAZ could continue up at the expense of the DOW. If SECTOR ROTATION was to occur that would be good for the NAZ/NDX, but for the overall market it could mean that the ANOMOLY of EXTREME SECTOR ROTATION still has not been corrected fully, which could mean more downside in the future.
I do not expect new highs in the NAZ/NDX by years end, nor do I feel that it would even be close. At best I feel that the NDX may be back in a TRADING RANGE from around 3000-4100 until the end of the year. |
