INDEX UPDATE
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Yesterday the BKX, XAL, TRAN slightly broke their lower trendline to the downside. These indexes should be followed to see if they continue/diverge to the downside. If they continue/diverge to the downside, it could be a significant hint that the market could be topping off for the mid-term.
If the interest rates are cut next TUE and these indexes do not recover, I would then consider that as a significant hint that the market may be topping off soon topping off.
The BKX, XAL, TRAN are not major indexes, but are important enough that they should not be discounted.
Many are saying that we are now back in a BULL market, and we could be; however the strongest confirmation of such would be when the DOW and other major indexes set new highs. Untill the DOW breaks 9400 range I will maintain my position of trading range trend.
The FOMC meeting is still 5 1/2 trading days away and there is time for another upswing into the FOMC meeting to at least retest the recent highs if not highe. Per my technicals, this downswing which started yesterday should last a total of 2-3 days, so this downswing should end either today or tomorrow.
There is strong support at the 8700-8800 range, and I hope the DOW can get that low so it would produce a better entry point on CALLS for the following upswing into the FOMC meeting next TUE. If this dip does not head lower, then we should could head relatively flat into the FOMC meeting. The upside should also be limited to the recent highs until the FOMC meeting.
FRANCE, GERMANY, BRITIAN, JAPAN, appear to be in BEAR MARKET rally since they are still in the LOWER LOWS/LOWER HIGHS mode so they could have some negative influence on our markets by limiting the upside of our market.
I am not saying that we will retest the 7400 lows, just that we are still in a trading range for the mid-term. I do admit that the trading range has shifted upwards. Even if the the FEDs do cut rates, I feel that we will still be in a trading range, although the trading range could move up a little more.
Seeya
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