....It is also a good sign that the NAZ has bottomed and is showing strength.... Today's performance helped confirm per my system that the reversal which started last Friday is still intact and that we should not revisit those lows of last Friday in the short-term.
This is a positive thought that I am skeptical about. Any market stats obtained during the last part of December and even the first part of January is IMO usually meaningless. I have not looked at the volume lately, but I suspect you will find low volume with the indices like the Dow and NASDAQ to support this position of mine. Also, at best, this "reversal" can only be considered a very short term phenomena.
Lets see...on a daily chart from quote.com, what looks like the past 5 trading days volume is below normal. Note that this does include full trading days. The volume went from well over 800,000 on the DJIA to a couple 500,000 days to a couple 250,000 days to about a 160,000 day. The average over one month seems to be about 550,000 shares per day. I am operating visually here, so I may be a bit off.
The chart of the NASDAQ on bigcharts.com shows volume below average for close to 10 trading days. The average appears to be 700 to 750M. There was a few 600M days, then a 450M day, and thent he last 4 trading days 300M or substantially less. This chart does not show me any clear "reversal", and the price is still below a significant resistance level at just below 1550. Then there appear to be resistance points at 1575, 1700, and a significant resistance at 1650 and of course its old high at about 1750. This index is below its 50 and 20 day MAs, both which are downward sloping. The NASDAQ is right now riding up against its 200 day MA at about 1500 which it has not broken through yet. The 200 day MA still appears to be upward sloping. These net charts are terrible! The NASDAQ is still 15% down from its high and has broken down through a significant topping pattern that lasted about 4 months before the breakdown occurred. I do not see any evidence on this chart that NASDAQ has broken out of its downtrend and is anywhere close to making any news highs, or even started a consolidation pattern. The NASDAQ does appear to be oversold, so it may retest its resistance at about 1550. Next significant support is at 1400.
The high techs will lead the next rally unless another leader establishes itself which I do not see any evidence of yet. This means that the market is not likely to rally without the NASDAQ. So in the near future, I would look closey at how the price acts at its significant support at 1500 (200 day MA), and the significant resistance at 1550. IMO if the NASDAQ breaks above 1550, it may then consolidate. If it breaks below its 200 day MA at 1500, then it will test the next significant support at about 1400 which means we still will be in a "down" market. This market as indicated by the NASDAQ may have "bottomed out" for the short duration, but IMO this still should be considered a down market of intermediate term significance.
Any opinions or comments?
Bob Graham |
