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Strategies & Market Trends : Group Theories

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From: macavity	2/8/2005 5:44:16 AM
	of 1017

Stocks Right now stocks are in a similar place to the other reflation-bull-assets. Though they are outperforming! LT_lagging indicators are Bullish/Neutral with a bearish momentum divergence LT_leading indicators are Bearish IT_lagging indicators are Bearish (US) ; Bullish (Euro) IT_leading indicators are Bullish Even though Euro indices are Bullish ; they are exhibiting IT bearish momentum divergences. If the theory is correct, that we are seeing a collapse of the reflation trade, then we should be seeing a turn down in stocks soon. Using the $SPX as my proxy we are ST overbought in an IT beartrend - a classic trend continuation pattern. Yesterday was a doji day indicating a pause in the recent ST rally. Whether this signifies continuation, or a reversal is as yet unknown - the ST trend is up and until ST_leading indicators turn down I have no business going short. The ugly duckling (taking the bearish slant) is the Nasdaq (NQ) There is formidable resistance in the 1550/55 region and it is underperforming. For the ST charts there is 21p and 55p EMA support at the 1525 level. A break below 1525/20 would indicate a continuation of the IT downtrend. We had a new low in WEEKLY VIX, unconfirmed by $SPX/$OEX price action. We are seeing new lows in Bond Yields. The dollar is strengthening - suggesting a (temporary) change in The Reflation Trade! Who knows? The ST Charts point up but the IT and LT charts give warning, as do certain readings in sentiment and internal, to not hold this ST Bull too close to one's heart. A break of 1525 - yesterday's session lows and i will go short the NQs with a stop above yesterday's high. A turn down in weekly charts and I will look for opportunities to go short the DAX.

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