MAR 27 INDEX UPDATE
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The short-term technicals on the DOW/OEX/SPX/NAZ/NDX/RUT are now all in the upper midrange. If the market continues up, I would get CLASS 1 SELL signals in about 2 days, 3 at most. Thats not to say that the market cannot start selling off right from here either.
The NAZ NET NEW HIGHs-LOWs is stabilizing around negative 50, keeping in mind that it did get as low as the negative 500 range last week. It is still in negative territory so Im not implying that the NAZ is going to rally strong yet, just that it is stabilizing for now.
The NDX may be in the process of forming the right shoulder of a small INVERSE HEAD & SHOULDER. Its best seen on a 60-min chart, but can also be seen on a daily. The neckline of this possible H&S is around 1750, and the measurement target is around 1900. No big deal, but is implying that there could be some more upside. The NDx needs to stay above 1650, otherwise this possible H&S may be negated.
Over the past 2 years, the NAZ/NDX have had strong oscillations, and it was common just for the intraday swings to be greater than 100 NDX points. Right now the NDX/NAZ is approaching the 1998 levels prior to the big selloff in OCT. Back in 1998-1996 I recall that the average daily move in the NDX was in the 25-50 region where 50 points was consider then a very strong move; however many are still accustomed to the huge move in the NDX and are still expecting it. Now that the NDX is only moving 25-50 points, some are saying that the NDX is doing poorly, but is it possible that the NDX is just returning back to those common oscillation levels prior to the BUBBLE. So a 25-50 point move may be considered by some as being a weak move, where in actuality its just getting back to historical levels prior to the bubble. This may be quite disheartening to those who expecting to regain their losses anytime soon, but as P/E's and price are returning to historical levels prior to the bubble, why cant other factors like daily/cycle oscillations get back to historical levels. So where many are so used to the 100 point daily oscillations in the NDX, they may need to get use to much lower levels.
One thing that I am noticing is that EXTREME SECTOR ROTATION has now declined substantially, which I consider a good thing since my positions for a few years now has been that EXTREME SECTOR ROTATION is an ANOMOLY and anomolies in any nature process gets corrected to some degree. From a personal position, I suspect that my short-term technicals become more reliable in both a market that is relatively flat(smaller trading range) and a market without EXTREME SECTOR ROTATION.
Right now, I feel that the NDX is starting a trading range that could last a long time. Of course there will be spikes either up or down but still some sort of a trading range. Im guessing that this trading range may be around the 1600-2300 region with spikes as low as 1400 and as high as 2700. Im not ignoring the possibility of seeing the OCT 1998 lows of 1063 either, but for now think that is less likely until the market internals deteriorates dramatically. |
