DEC 9 INDEX UPDATE
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Short-term technical readings:
DOW - upper midrange
SPX - borderline CLASS 2 SELL signal
OEX - borderline CLASS 2 SELL signal
NAZ - CLASs 2 SELL signal
NDX - CLASS 2 SELL signal
VIX - 26.13, CLASS 2 BUY signal(inverse to market)
PUT:CALL - .59
With the 4:00pm FRIDAY announcement from the FLORIDA SUPREME COURT, the futures dropped dramatically. If that remains unchanged, such would imply a down opening on MONDAY.
Regardless, my short-term technicals were approaching the CLASS SELL territory on FRI.
There were positive developments in the NAZ/NDX, mainly concerning the SOX and BTK. The BTK broke above the BEARISH PENNANT which is very bullish, and the SOX created a MINOR(local) HIGHER HIGH. Also the NAZ MARKET INTERNALS(NEW LOWs) have improved. As negative as it appears from the Florida Supreme Court announcement, the NAZ did have some positives for the short-term.
These positive developments in the NAZ/NDX is giving me hints that if there is a retest, which is statistically probable, the retest should be successful and could form some sort of DOUBLE BOTTOM, whether the second leg is slightly lower or higher than the 1 leg down. Again, Im only speaking for the shorter/mid-term, not long-term. Statistically, the probability is high for some sort of a retest on declines of >7%.
As for the longer-term view on the NAZ/NDX, I did not like the manner where a few stocks were so hot last week. That gives me the impression that the momentum type trading is still not totally washed out/capitulated. That doesnt mean that Im positive that the NAZ/NDX will create LOWER LOWS later, just that its still a sign of over-bullishness and we should not ignore the possibility that the NAZ/NDX could go even lower down the road. So Im less bearish/bullish for the short/mid-term(subject to a possible retest), but for the longer term Im still bearish and still questioning whether the NAZ/NDX can go lower.
Overall, I am more bearish on the DOW and the SPX than the NAZ/NDX now. The BKX(BANKS) and DRG(DRUGS) are really not far from all time highs, and recently many DOW/NYSE stocks have rallied signidicantly. Basicly I consider the recent rallies in the DOW as another example of EXTREME SECTOR ROTATION/FLIGHT to SAFETY, where money has been flowing from NAZ to the DOW. As I have mentioned often, I strongly feel that EXTREME SECTOR ROTATION will be eventually corrected to the downside, where others feel bullish in that it is forming a base for the next leg up. The TREND IS YOUR FRIEND, and the trend for the almost 2 years concerning EXTREME SECTOR ROTATION is that eventully some sort a correction follows.
Also for the longer-term view, I really believe that the US DOLLAR may be the main key for direction in the market. If the US DOLLAR continues to drop - thats just not good for stocks. As mentioned previously I have the main trendline from 1997 around 112, and a drop below 112 is a significant negative since it implies a break in trend. Last week the DOLLAR got slightly below 113 and bounced. Lets see how far this bounce takes it - if its a weak bounce, thats not a good sign. tfc-charts.w2d.com
In both the WEBSITE and my personal account, we closed the majority of our long positions on FRIDAY where we are now basicly evenly hedged and 87% cash.
I will still not be available unil around Tue/WED.
thanks for all the well wishes |
