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Strategies & Market Trends : Ask DrBob

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From: Drbob512	12/8/2008 11:19:42 AM
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* TA Update (intra-day) * The market internals are very positive thus far with the NYSE a/d at 5/1 and Nas a/d at 3/1, with both u/d vol near 8/1, on moderate volume. The volume needs to pick up if this rally is to sustain or to extend by the close. Most short-intermediate term indicators are now positive and a follow-through day to the upside today would likely confirm this rally to extend for a minimum of a couple of weeks. Short term indicators are overbought and that is positive if the market can close strongly today for a stochastic pop. The internals being so positive today gives the market a fairly good chance of maintaining gains to the close but of course anything can happen in the last hour. The bearish sentiment remains very high in terms of AAII and Investors Intelligence which has short-intermediate term implications. The VIX seems to have topped out as has the VXN, and the latter has a Macd that is crossed down and may be indicating a reduction of volatility and therefore a reduction of selling pressure. The rally today so far is more a lack of supply than strong demand but that should be watched carefully in the next few days to see if that continues. If it does, then a selloff is likely but if the demand in terms of volume starts to pickup, then a rather strong rally of perhaps 10-15% could occur in the next few weeks, with Spx of 1,000 a possibility. The market rallying on last Friday's awful economic news was a sign that perhaps the selling is mostly exhausted for now and also that some short-covering might occur for a while. There will likely be more bad economic news this week and we shall see if the market can digest it while holding todays and Friday's lows. Summation Indexes appear to have double bottomed and their 10% indexes need just one more rally day in order to turn positive. This market action appears to dissuade short selling. Crude oil has rallied $3 today as well and commodity-based and selected technology stocks are rallying sharply, after having been extremely oversold. The close could determine the trend for the week. drbob

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