INDEX UPDATE
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It is kind of obvious that alot of the market is oversold such as the NAZ, TRAN, BKX, XAL, RUT, ETC. What is really surprising is that the DOW, SPX, OEX, XMI, HFX are all in the MID-RANGE, per my short-term technicals. What is even more surprising is that the SPX is at 35 and the OEX at 40, even in light of their strong intraday downswing. I rechecked the calculation several times since I would have thought that the technicals should have gone down, but they were correct.
So basicly the overall market should rally, at least, for part of the day if not the whole day. As indicated yesterday, felt there would be one last small and short rally before the next leg down which should be very strong to the downside.
I believe the TOP of this cycle was put in on WED when the DOW got as high as 7880; therefore the STAIRSTEP should still hold.
From a technical basis, almost all indexes either set NEW LOWS or LOWER LOWS yesterday, even the DOW when it dropped below 8500 to 8468. The SPX and OEX did set new intraday LOWS. So just from basic technical analysis, LOWER LOWERs were established accrossed the board yesterday.
Unless the market can set higher highs within 2-3 days, then the market will continue the process of establishing lower lows. The reason I mention 2-3 days is because the upside potential for the DOW SPX, OEX, on a mathematical basis is 2-3 days since they are in the mid-range
As mentioned previously, the BUBBLE IS DEVELOPING again - CAUTION!!!!!!
To determine if this rally is for real, the market internals need to improve dramatically on high volume, and any rally needs to be broad based, so watch the RUT to at least keep pace with the DOW or exceed it to the upside.
Next week is expiration week, and I am wondering if there will be an arbitrage situation. My initial feeling is that if there is an arbitrage situation it would be to the downside since most of SEPT was on the upside and maybe the calls outnumbered the PUTs. This is only a feeling and not substantiated, so pls comment on this issue.
Seeya |
