Thanks, Bland
Very interesting. Saw that chart posted on another thread, I think by Paul Shread:
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I agree support there should hold. A break there would very likely have enormous consequences, particularly if the break was on strong volume with deteriorating internals. Whether there will be a strong move up from that support is another matter, however. A successful test there could also begin a consolidation/basing phase (with that trendline as the lower limits of the range), or a moderate uptrending (accumulation) phase.
I've been looking closely at $COMPX market internals lately, especially the A/D line, the New Hi/New Low, and the COMPX Arms Index (TRINQ).
FWIW, I've calculated a composite index with equal weightings of these, and plotted various moving averages. I've followed this composite over time, and there is a very good relationship between the moving averages and market movement, and particularly moving average crossovers. The 100 SMA and 55 SMA have been downsloping or horizontal since the March selloff. That selloff, BTW, was easily apparent in the form of moving average crossovers and reversals of upsloping moving averages to downsloping preceding the selloff; it was not subtle.
In any case, now there is a bullish upside crossover of these moving averages, and they are all upsloping. The faster moving averages have peaked, and are moving down towards an obvious test of support in the next week or so. If this test holds, the market internals will dictate an uptrend because the long-term moving averages of these internals are rising. Since the short-term moving averages (i.e., the signal lines) are moving sharply downward, in the short-term this may mean a bit more downside in the $COMPX. But medium term (a week or so from now out to 1-3 months or more) there should be strong buying pressure into the $COMPX components.
The fact that all major moving averages are upsloping now I view as a very bullish indication, and shows that buying pressure in increasing steadily in the $COMPX.
The $VXN trends would appear to be consistent with this scenario:
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There are mixed signals from sentiment indicators, but still overall I think they are consistent with the medium-term bullish outlook indicated by the above internals:
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So in summary, we have solid chart trendline support, bullish indications from the $VXN, internal indicators indicating buying pressure, and sentiment indicators at least consistent with a short- to medium-term bullish outlook on the $COMPX.
JMVHO, as always........
Walkingshadow |
