>>I started shorting the Dow Index stock (DIA's), noticing paul shread's rising wedge<<
Thanks for blaming that on me. <ggg> I think I said at the time it had 2-3 weeks to run, which gave it upside to around 10,500/early May.
Obviously, it's negated now, but I think it may be forming another rising wedge here; will look more closely later - until then it's a strictly speculative observation. That said, it looks like maximum downside based on the new pattern is 9400 or so, so it looks like some sort of bottom may be in.
On the other hand, stocks like GM and IP have been utterly unable to take out the most basic resistance and are setting lower highs, as is the Dow. If not for the techs, I suspect yesterday would have been a down day for the Dow. That could mean that fresh money has stopped coming into the market, and that we have sector rotation again. And to quote Don, we all know how that ends. ;-) And looking at your monthly chart, it occurred to me that the Dow may be in a two-year down channel.
Looking at your daily COMPX chart, it looks like it could go right through that upper channel, based on your indicators. FWIW, I was noticing yesterday that slow stochastics and CCI are way overbought, but that MACD, PPO and ADX have more potential upside, which could mean a pullback and then higher highs. Also noticed that we are completely out of the upper Bollinger Bands on the major indexes, but I couldn't tell you what the heck that means. ;-)
stockcharts.com[h,a]daclyymy[pb50!b200!c20!d20,2][vc60][iud20!lf!ll14!lb14!la12,26,9!lh14,3!lc20!le12,26,9!lg]
And finally, to revisit that recent broadening top in the PC ratio (page A24 of today's IBD): I've never used a measured pattern target on that ratio before, but believe it or not, that would predict minimum downside on the PC ratio to .25 (it closed at .44 yesterday). I don't know if that's even possible, but I would interpret that to mean that this rally could go quite a bit higher - and there may be no downside protection at the end of it. Would welcome other interpretations and reads on that, including on the validity of pattern measurement in an indicator.
And a big point in the bull's favor: Ralph Makempoorer does not think we've put in a bottom. The worst big-name technician I know of the last few years. A better contrary indicator than Cramer.
That's all from here. |
