INDEX UPDATE
---------------------
All my charts are not yet updated with Friday's data, but have noticed good signals of a healthy market and that this short-term rally has strength in it although it is is approaching overbought and should have an interim top soon. Unless there arefundamental changes, like really bad earnings from bellweather firms, etc, the pullback after this short-term rally should be just a technical one and small, placing the next dip higher than the previous lows.
Here are some of the signals I picked out from Fridays performance, which are saying that this rally and overall market is healthy and can move up a bit more (keeping in mind that it is near overbought):
SOX popped up
DDX popped up
XCI popped up
Many of the Non-HiTechs were flat or slightly down
XBD was down alot
Per an earlier post I had indicated to watch the SOX to determine futher movement upwards for this interim rally, which it did with strength.
I am interpreting the above that money is rotating and this interim upswing is becoming broader. One may argue that the RUT is a broad index covering the small-caps and that it was down slightly, but please keep in mind that it was actually a CLASS 1 SELL and serverely overbought for the short-term.
I am not saying that this immediate upswing will go to the moon, just that it is healthy and relatively strong. Technically, there is not that much more to the upside for this upswing, since overall we are basicly on the borderline of the overbought region per my short-term techhnicals. Next week, overall should be an up week (Im not saying everyday will be up) then we should start topping off at the end of next week or the following week.
The next question would be, is how large of a pull-back if any. Not considering fundamentals and the large downside impact bad earnings/forward statements could have, I feel that the pullback will be mininal and that we will be forming a base awaiting the earings.
The DOW should top out in the 8000-8100 range, then flatten out or pullback slightly to the 7900-8000 range. Then we wait for the earnings for further direction of the market.
If I do initiate PUTS once I get CLASS 1 SELLS it would be for fundamental reasons (waiting for some bad earnings), not for technical reasons since the technicals are not indicating a strong pullback. I most likely will play FEB PUTS not JAN's since the earnings will only start coming out near JAN expiration.
Right now, my PUT candidates are: DJX, NDX, MSH, SOX(if it gets close to 300).
Korea was open last night and it was up substantially. It was a big white day and was almost a WHITE MARUBOZU. A true MARUBOZU has no shadows, but there was only a very slight downside shadow last night. A WHITE MARUBOZU is normally a bullish continuation/bullish reversal signal.
Happy new year
Donald |
