NOV 23 INDEX UPDATE
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Short-term technical readings:
DOW - oversold, borderline CLASS 2 BUY
SPX - borderline CLASS 1 BUY
OEX - borderline CLASS 1 BUY
NAZ - CLASS 1 BUY
NDX - CLASS 1 BUY
VIX - 31.04, upper midrange(inverse to market)
CBOE PUT:CALL RATIO - .83
5-DAY TRIN - 6.81
Per my short-term technicals, the overall market is in CLASS BUY territory. With the CLASS 1 BUY signals on the NAZ/NDX, the buy-in window is until FRI's intraday lows. Since FRI is a half-day, things may get skewed some, but dont know since I dont recall having a CLASS SIGNAL land on half day before.
The 5-DAY TRIN increased again to 6.81, and readings above 6.00 are buy signals. Wed was the 3rd day in a row with readings over 6.00. My understanding is that 3-5 days in a row with readings over 6.00 is the most before some sort of resolution. So the 5-DAY TRIN is in line with my short-term technicals.
The PUT:CALL RATIO at .83 is in bullish territory, so that is also in line with my short-term technicals.
However the VIX is only in the upper midrange and would take 1-2 days of further selling in the market for the VIX to be in line with my short-term technicals, so it is a little out of line.
The main negatives were that the NAZ/NDX/SPX created LOWER LOWs on a closing and intraday basis. As mentioned often, with declines of 7% or greater, the probability is good that there will be a retest.
It was also mentioned by Arik that the SPX may be forming a HEAD & SHOULDERs since mid-OCT. That would also appy to the OEX. On the SPX, the LEFT SHOULDER was around 10/23, the HEAD around 11/6, and the RIGHT SHOULDER around 11/15. If the H&S holds form, then the measurement target is around 1225. Im not saying that the H&S will or will not work, but it should definitely be mentioned. On the other hand, it is also possible that the SPX is just retesting the previous trough in mid-OCT, and may be forming a DOUBLE BOTTOM.
The NAZ NEW LOWs declined again to 614. Sorry but that just ain't a good sign and negates the POSITIVE DIVERGENCE I mentioned previously. However, it could also be some sort of capitulation in the NDX, whether its minor or medium or rare, too early to tell. Unfortunately, it is fair to say that the NEW LOWs are confirming the price action in the NDX.
On a brighter note, the NAZ and NDX may possibly be forming BULLISH WEDGES. Here are the coordinates for the NDX:
UPPER TRENDLINE - highs of 11/6, 11/8, 11/15, 11/16
LOWER TRENDLINE - lows of 10/26, 11/13
There are only 2 touches for the LOWER TRENDLINE; therefore it makes this BULLISH WEDGE questionable. However, I want to mention it since the LOWER TRENDLINE is around 2550 for FRI, which is also an important horizontal support. The UPPER TRENDLINE of this possible WEDGE is around 2900 for FRI. A break above 2900 would be a nice positive and imply further upside.
As negative as the NAZ/NDX is looking with NEW LOWs at 614 and with the price producing LOWER LOWs, the positive divergence in the MACD has not yet been negated. Although I never use one indicator to determine direction and that it would be better if it was supported by other positive divergences, it should still be mentioned.
From a previous update: "As mentioned previously, it is common that even in severe bear markets to see a 38% FIBONACCI rebound of the immediate down leg. For this discussion lets say that the NDX does get to 2600. Based on 2600 here are the FIBONACCI REBOUND LEVELs calculated from the SEPT PEAK of 4080 and the OCT PEAK of 3380:
4080-2600 = 3162(38%) 3340(50%) 3518(62%)
3380-2600 = 2896(38%) 2990(50%) 3084(62%)"
Note that the 38% FIB level at 2896 is right at the most current downward trendline, which is also the upper trendline of the BULLISH WEDGE, mentioned above. So its fair to say that if the 2550-2600 support holds the rebound should at least take the NDX back to the 2900 region.
As mentioned previously a mid-term cycle low arrived on TUE, with a buffer of a few days. Time will now tell if a rally with some significance can start from these price levels - with a possible retest first.
Its quite obvious that the DOW has not been selling off with the same intensity as the NAZ. If it is a hint of EXTREME SECTOR ROTATION in the past, we may eventually see an interim where the money starts to rotate out of the DOW back into the NAZ. Just speculation.
Well, it time to resume my cooking for Thanksgiving. Happy THANKSGIVING ALL!!! |
