FEB 5 INDEX UPDATE
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Short-term technical readings:
DOW - overbought
SPX - lower midrange
OEX - lower midrange
NAZ - oversold/borderline CLASS 2 BUY
NDX - oversold/borderline CLASS 2 BUY
Per my short-term technicals its showing sector rotation again with the DOW and NAZ at opposite ends. If the NAZ/NDX continues down I would get a ClASS 1 BUY in 1-2 days(TUE/WED), and if the DOW continues up I would get a CLASS SELL in about 1-2 days.
Previously I had mentioned that the XLK was forming both a RECTANGLE and an INVERTED HEAD & SHOULDERs. Both patterns are still intacted.
Also as mentioned previously, we got an overshoot to the downside below the LOWER HORIZONTAL TRENDLINE of the RECTANGLE, which may become the trigger for the next move up. On the other hand if the XLK doesnt move back into the RECTANGLE on TUE/WED, then that may negate the pattern, and then could be a hint that the NAZ/NDX has more to drop. There is also a possible INVERTED HEAD & SHOULDERs pattern that may be developing on the NDX, as mentioned previously, but not as clear as on the XLK.
There were quite a few DOJIs/SPINNING tops in the HiTECHs, both indices and stocks(NAZ/NDX/IIX/DOT/CSCO/INTC/etc). DOJIs/SPINNING TOPS are indecision days and are common at reversal points. The NAZ had a DRAGONFLY DOJI and there was a slight gap between the bodies, which is a SHOOTING DOJI STAR reversal pattern. Of course it requires confirmation, but if tomorrow gaps ups and closes positive and does not close the gap intraday, then that would produce a MORNING STAR, which is a reliable candlestic reversal signal.
The main negative for the NAZ/NDX is the SOX which was the weakest of HiTECH indices. If the SOX does not start to rebound, that could be a leading indicator of further downside in the NAZ/NDX since the SOX has been a reliable leading indicator for the HiTECHs for months now.
The market internals, specificly the NEW HIGHs/LOWs on the NAZ deteriorated very slightly, but not enough to make a firm conclusion.
Yesterday I was questioned on my comment concerning the rising wedge on the NAZ. I just want to make it clear, which I thought I did already, and that was I was not commenting on whether the rising wedge would would work or not, but I was commenting on the quality of the analysis by ignoring the volume issue. To ignore basic rules, without an explanation(repeat -without explanation) does not do an analysis justice. Again, it was not an issue of a right or wrong call, but on the quality of the analysis WITHOUT EXPLANATION. Its not as bad, but its similar to someone commenting that the the NAZ will run to 5000 without an explanation. How was the quality of that analysis, or in that case where was the analysis.
As for my personal and website mutual fund account, I closed the short positions(USPIX) and added a small long position(UOPIX). So we no longer have hedges anymore just long positions. Although some may feel that it is risky to go long now, which I do agree, please keep in mind that our cash position is still high around 86% and we are playing on profits, so we can afford to take some risks. My personal mutual fund account is 70% cash. In my trading account, attempted to get JUNE XLK CALLs, but my limit order was never reached. |
