INDEX UPDATE
----------------------
I'll say it again, that I am surprised at the strength of this rally, in light of weaknesses in 2 significant indexes(SOX & XOI).
Per my SHORT-TERM technicals the following indexes just entered the overbought region:
XOI
RUT
IIX
DRG
MSH
EGI
OSX
The following indexes are one up day away from entering the overbought region:
DOW
SPX
OEX
NAS COMPOSITE
BKX
NDX
Here are the indexes which still have more upside room:
XCI
SOX
Per my short-term analysis, when a stock reaches the overbought range it can still move up and does not mean it is an immediate sell. Of the group which just entered the overbought region only the RUT is very close to a CLASS 1 SELL. If I had to guess, for those in this group it would require about 1-2 more up days for them to become CLASS 1 sells, and these up days need to close near their highs. Also these days in the overbought region can still be substantial up days; they are not limited when they are in the overbought region, in fact these days are sometimes the strongest days.
Please understand that my analysis is only slightly based on price/support lines/resistance lines; therefore I try not to emphasize specific price targets, although I have, but prefer to use time as target point to sell or buy as I do with my CLASS 1 BUYS.
My GUITAR is saying that the market is actually acting slightly unhealthy yesterday, on a purely technical basis. Just because the market is moving up strong does not mean it is healthy. A technical breakout is not healthy since it will cause strong volitility, and my analysis is hinting of the possibility of a technical breakout to the upside. If all of the indexes are up again today, then that would be another strong hint of a technical breakout. The healthiest manner for the market to react is for the overall market to be somewhat flat today with some indexes negative. If there is a technical breakout, there will be very good potential for making money on the downside, since once it turns the downside will be strong also as it was on the upside.
If the market returns to a more healthier state then the downside will not be all that great, since this immediate uptrend is far from weak. Granted I am only talking on a technical basis - of course if bad earnings comes out, the Asian Flu increases, Saddam goes nuts, Clinton has a nose bleed, Hillary slaps Bill in public, Modanna becomes president (gggggg), which changes the fundamentals substantially then of course the downside can be much much greater.
I guess what I am saying is that this uptrend is strong and substantial, even in light of certain weaknesses such as the SOX/XOI.
Previously, I had mentioned the trading range for the DOW of 7550-8100, and a few have responded that the 8100 limit may be pierced. Per the technicals last night there were hints that such may be possible, althought far from being close to conclusive.
Here are some keys to watch to see if the market could continue up alot more:
1) SOX to pop up substantially
2) Those indexes which just entered the overbought region to continue up strongly, not just a little.
3) Almost all of the indexes to be positive.
4) RUT to move up strongly
On last thing is that the JAPAN and KOREAN markets are closed so they should not have any negative effect on today's trading.
Hong Kong was open and it was down 32 points (.3%) on a 10700 point index. Please keep in mind that is 1947 points (22%) above its recent bottom and that it has run-up substantially over the last few days. Doubt if the media will say that.
Although technically the market should start topping out, I would not be surprised to see it continue up strongly.
Happy trading.
|
