>>>longer term you have to be optimistic from these teensy prices.<<<
teensy prices? Compared to what?... You might want to factor in a little historic valuation to your optimism.
As for the short term:
"The arguments for a short term bounce are as follows:
TRIN and OTRIN (the Nasdaq version of the indicator) are bullish.
The volatility/sentiment indicator VIX has reached the top of its ST
regression channel and, since it's an inverse indicator, any turn down from
the top channel line would be accompanied by a rise in the market.
All three major market indexes (Dow, S&P, Nasdaq) are ST oversold and back at
the bottoms of their ST regression channels. And while violating support at
the 2000 level intraday Friday, the Naz managed to climb back above it on a
closing basis.
The vast majority of sector indexes are similarly short term oversold and at
the bottoms of their ST regression channels.
But the fun, if we do indeed get it, isn't likely to last long. There are
equally compelling technical signs that we'll see much lower prices in the
intermediate term, sometime between now and summer's end.
VIX and VXN (the Nasdaq version of VIX) are at the bottom of their
intermediate term (IT) regression channels. Both weekly stochastics and
weekly DMI are giving new crossover buy signals on the VIX and are about to
do the same on the VXN. And the MACD histogram for both VIX and VXN has
ticked up while below the zero line, usually a reliable IT buy trigger.
Remember, these are inverse indicators. Their buy signals are market sell
signals.
On the Nasdaq IT chart, weekly MACD is just starting to break down and weekly
stochastics is flashing a crossover sell signal. The Dow has dropped back
below its 200 DMA and it, too, is registering a stochastics crossover sell on
the IT chart while the MACD histogram falls. And the weekly chart for the S&P
shows a histogram that has topped and is falling, while stochastics is giving
a crossover sell signal.
In sum, we could/should see a short term bounce, one that may take us into,
and perhaps through, the two-day Fed meeting of Feb. 26-27. But unless you're
in it strictly for the short term, such a rally will be best used for selling
rather than buying.
My current support/resistance levels on the major market indexes are Dow
10540-10910, S&P 1207-1321, and Nasdaq 1995-2265."
N. Proffit |
