FEB 19 INDEX UPDATE
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Just wanted to add a few more comments to the previous update, to confuse matters more.
Although bearish signs are accumulating, our DIVERGENCE INDICATOR is showing a very clear POSITIVE DIVERGENCE in the NAZ and SPX, but not the DOW, these types of positive divergences are more mid-term than short-term, although could be just short-term.
I am also noticing short-term positive divergences in the MACD for the NAZ/NDX/SOX/IIX, and a slight positive divergence in the DOT.
In light of the significant negatives mentioned in the previous update, Im getting these contradicting positive divergences. So how do we tie these contradicting issues together. The best senerio I can think of for now, would be a short-term move upwards to start soon(about a week); thereafter selling to resume.
In light of the strong negative issues, I feel that the forth coming rally should produce a LOWER HIGH.
I have been hearing the arguement about alot of money on the sidelines, and I believe that is true. However, the issue is when and how much of that sideline money will come back into the market on a consistent/increasing basis. Recently the mutual funds have been seeing outflows.
My feeling is that on a percentage basis the NAZ/NDX is possibly closer to the main bottom than the DOW. Im not saying that the NAZ cant go lower, just that the DOW may decline more than the NAZ on a relative basic.
Although the NAZ has dropped more than 50%, it is still interesting to note the INDEX P/E is still very high on a historical basis. For those who are so sure that the NAZ has bottomed for good, the RUBBERBAND that was pulled so hard to the upside, may be pulled equally as hard to the downside. I hear often that a stock should not drop so much in light of fundamentals, then why did it run so hard to the upside beyond the fundamentals. My belief is that this rubberband theory is caused by emotions. Isnt it common in human nature to blow things out of proportion regardless if it is positive or negative. Sounds simplistic, but thats the best I can do.
seeya |
