DEC 26 INDEX UPDATE
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Short-term technical readings:
DOW - midrange
SPX - midrange
OEX - midrange
NAZ - midrange
NDX - midrange
VIX - 32.54, midrange
CBOE PUT:CALL RATIO - .95
5 DAY TRIN - 5.65
Per my short-term technicals the overall market is smack in the middle, implying that both the downside and upside potential room is about the same. Midrange is also what I call FLIP-of-the-COIN territory.
Previously I mentioned the possibility of a 3-DAY PATTERN, and today successfully completed DAY-2, which should either be up strong or flat. In the case where DAY-2 is FLAT then DAY-3(tomorrow) could be up strong similar to DAY-1(FRIDAY). However I must warn that the probability of the 3-DAY PATTERN succeeding is better if it in the direction of the trend, which is not the case now unless the trend has actually changed awaiting confirmation. Another way to look at it, is if the 3-DAY PATTERN works that could also be a confirmation that the trend(short/mid-term) has reversed upwards.
What is interesting is the high PUT:CALL RATIO at .95. Per the contrarian methodology, its actually bullish in that there is a realatively high level of PUTs. Not that .95 is an extreme level, but its surprising to get such a high reading with the overall market relatively flat, implying that theres still a bit of fear out there. As the old saying goes "The market climbs the wall of worry". Also noticed that the VIX was up 2.04 intraday and closed up 1.04 on a day that the overall market was FLAT. On a relative basis that was a strong move upwards on a day that was flat, again giving the hint of relative excessive short-term fear.
A slight bullish issue, or we should say less bearish is that the NAZ NEW LOWs only deteriorated slightly. Not to hype it as being firmly bullish, just highlighted that it could have been alot worse.
Im not going to put alot of emphasis on the 3-DAY PATTERN, since it is not in the direction of the trend, however in light of the short-term relatively high fear level, it still has a chance of working.
In no way am I turning overly bullish, since I am still expecting a retest of the recent lows, just playing the short-term swings. |
