OCT 31 INDEX UPDATE
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Short-term technical readings:
DOW - ongoing NEGATED CLASS 1 SELL SIGNAL
SPX - overbought region
OEX - overbought region
NAZ - midrange
NDX - midrange
VIX - 25.90, oversold(inverse to market)
CBOE PUT:CALL - .64
5 DAY TRIN - 4.51
Per my short-term technicals the SPX/OEX could get to CLASS 1 SELL territory in 1-2 days and the NAZ/NDX in 2-3 days, so there is still more potential upside room if they continue up.
Although it is not a perfect formation, one could argue that the DOW formed a "3-WHITE SOLDIERS" which is a very reliable bullish pattern. The 3-WHITE SOLDIERS implies strong bullishness in that it has longer-lasting influence. That doesnt mean that the DOW just moves straight up, although it could - but that the forthcoming pullback should be small and thereafter HIGHER HIGHs should be produced.
From a rough calculation, the NDX would get into CLASS sell territory if it was to approach 3500 region.
The one weak spot was the NEW HIGHS/LOWs:
DOW - 99(new highs), 51(new lows)
NAZ - 90(new highs), 135(new lows)
Today the NEW LOWs on the NAZ was greater than the NEW HIGHS, even though the NAZ was up very strong. I will not make too much of that since it takes a fews days for the NEW HIGHS/LOWs to catch up. However if they do not catch up soon, that would be a hint of negativity forthcoming. The DOW is actually a bit of concern. Of the past eight trading days the DOW was only down 1 day, so the NEW HIGHs/LOWS had plenty of time to improve. I would prefer the NEW HIGHs to be close to the 150-200 region and the NEW LOWs clearly under 50, to say that the NEW HIGHs/LOWs are supporting this rally.
This morning the DOW clearly lagged the NAZ significantly but caught up by the close. Our DIVERGENCE INDICATOR did give a NEGATIVE DIVERGENCE(short-term top), and it appeared to be working in the morning. Lets see if it kicks in by tomorrow.
As mentioned yesterday, we are now biased to the long side in the ratio o 2:1 per our website account, with about 75% cash. Unless the technicals changes we will be adding to our long positions(UOPIX-long NDX) at the forthcoming pullback. |
