MAY 22 INDEX UPDATE
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Short-term technical readings:
DOW - pending CLASS 1 SELL signal
SPX - pending CLASS 1 SELL
OEX - pending CLASS 1 SELL
NAZ - pending CLASS 1 SELL
NDX - pending CLASS 1 SELL
SOX - pending CLASS 1 SELL
Of the indicies mentioned above the only index not to close negative was the NAZ. The SOX commonly leads the NAZ/NDX, as has been the case for months, and with the NDX also closing negative, I suspect that the NAZ will follow to the downside over the next few days. With the DOW closing down 80 points, its fair to say that it is responding to the CLASS 1 SELL signal. With the DOJIs/SPINNING TOPs on the other indices, those are candlestic hints of a short-term top. In light of todays actions I feel that the CLASS 1 SELL signals have a good chance of working and we should see some more continuation to the downside over the next few days.
With the DOW down significantly and the NAZ/NDX basicly flat, that is a hint of some sort of SECTOR ROTATION from the DOW into the NAZ. If this action continues, the NAZ may not drop too much, and may even rise a little. So Im suspecting that this forthcoming short-term pullback may be small in the NAZ/NDX.
As first mentioned a few weeks ago, there are many INVERTED HEAD & SHOULDERs in the major indices and individual stocks. Nothing is for sure, but in light of the recent bullishness in the indices, chart formations, and market internals, I feel that the INVERTED HEAD and SHOULDERs have a good chance of continuing/breaking out.
Not that I rely on or predict targets, but I did an ANDREW's FORK analysis on the NDX, and noticed that the MIDDLE TINE of this fork intersects the main downtrend line from the all time highs in about 9-11 weeks around 2600-2650. That would put the intersection around late JULY/early AUG. Of course, it doesnt mean that an break to the upside heading towards that MAIN TRENDLINE couldnt happen sooner. A better way to put it is that if the NDX does break to the upside to test the MAIN TRENDLINE off of the ALL-TIME HIGHs, it has a better chance of occuring within the next 9-11 weeks.
In my personal mutual fund account I closed some of my UOPIX (long NDX) yesterday, whereby I am now evenly hedged long & short, with over 90% cash. Once my short-term technicals get to the midrange, I will start to add long positions. So I wont be waiting for a CLASS BUY signal in case the pullback in the NDX is minimal. Statistically, after a CLASS 1 SIGNAL, my short-term technicals will at least get back to the midrange before reversing.
Just recently closed the majority of my gold stock(HM) positions, and hoping for an opportunity to buy back in. If the market, especially the DOW continues to rally, that may help gold stocks pull back some more, as long as the US DOLLAR doesnt deteriorate significantly. |
