FEB 18 INDEX UPDATE
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Short-term technical readings:
DOW - lower midrange
SPX - lower midrange
OEX - lower midrange
NAZ - lower midrange
NDX - lower midrange
VIX - 25.08, midrange(inverse to market)
VXN - 64.41, lower midrange(inverse to market)
PUT:CALL - .89
Per my short-term technicals, the overall market is in the lower midrange, which implies that there is still more potential downside room. That doesnt mean that it continues straight down.
I feel that there were 3 important negatives for the market that occured on FRIDAY:
1) DOW pierced the OCT inclining trendline, which is also the LOWER TRENDLINE of the ASCENDING TRIANGLE. However the DOW did manage to rebound off of the lows and close at the that trendline. The volume on FRI was not strong so I cant say that the volume confirms the break of the ASCENDING TRIANGLE to the downside; however piercing/overshoots are commonly hints of whats to come.
2) RUT(RUSSEL2000) did break and close below the lower trendline of the the RISING WEDGE. The RUT needs to rebound immediately back into the WEDGE, otherwise that just aint a good sign. Unfortunately, I cant confirm the volume on the RUT, in order to say whether the volume justified the downside break or not. Regardless, its not a good hint.
3) Weakness in the SOX. The SOX gave up all and more of the previous days gain and on a short-term relative basis appears to be deteriorating. As mentioned by LEE, the SOX is forming an RISING FLAG, which is a bearish pattern.
4) Just an added note, the 3-BLACK CROWs in the OEX did produce a downside break and could still be of influence.
Of course this doesnt mean that the market goes straight down immediately, but these negatives may have significant downward influence on the market in the future, and possibly even immediately.
What is somewhat puzzling is that the NEW HIGHs/LOWs on the NAZ did not deteriorate significantly; however it may now just be a matter of time where the NEW HIGHs/LOWs continue to deteriorate, in light of the RUT breaking below its RISING WEDGE, and if the RUT continues down.
On a short-term basis there I have notice a reoccuring pattern in my short-term technicals which could produce a short-lived but volitile rally, as in the 1-2 day rallys the NAZ/NDX had during the decline that started in SEPT. I would not put a whole lot into it, since the chances are only fair/OK, not strong.
I will be getting a mid-term cycle low either on WED or FRI. The reason Im getting 2 different dates is since Im unsure of as to where to start the count from, regardless the 2 dates are within 2 days of each other. This mid-term(30 days) cycle low is lining up with the END-of-MONTH RALLY, which statistically starts during the last 2 days of the month and extends 3-5 days into the following month. So in light of what was mentioned earler, a possible senerio is a 1-2 day rally at the beginning of next week then some selling into the end of the week/early following week. |
