David,
My analysis limits my projection for the short-term and is not designed to call the big move.
Seeya
>>>>> INDEX UPDATE
========================
My short-term technicals are giving a CLASS 1 SELL signal across the board, with the
buy-in time set at tomorrows highs, and for the dip to start the following day(WED).
During the strong runup in the spring, whenever I got this type of SELL signal they all
worked but the dip was as small as 75 DOW points on a intraday basis only, and the
average was around 100-200 range. Not that strong of a pullback. I am also suspecting
that this SELL signal could be delayed a day, regardless we should start to see some
sort of a dip within 3 trading days.
Today, the NEW HIGHs got above 100, and unless there is a complete reversal
tomorrow, such will reduce the probability of a significant pullback of 5% or more.
Previously, I had mentioned that if the NEW HIGHs were to stay under 100 and NEW
LOWS in the 10-50 ramge then the following month should see a 5%+ pullback. There
will still be a pullback and it should start as early as tomorrow or WED, but this
pullback could be very small and only intraday. I would not suggest it for a position
trade, but would be more suitable for daytraders.
Technically, there is only confirmation of a very short-term TOP, but no technical
confirmation yet of a mid-term TOP. For me to call a mid-term top (30 days), I need to
see either a DOUBLE TOP FORMATION or a LOWER HIGH in the major indexes.
If the forthcoming pullback is greater than 200-250 points, then there is a good chance
for a mid-term TOP, but if we get a slight pullback of only 75-150 points the probability
is that the market is heading higher. I have no idea the size of this forthcoming dip.
Today closed with a large WHITE MAROZUBO (no shadows on the candlestick);
therefore the probability is that tomorrow will not be a huge up day like today. The
intraday upside could be limited to less than 100 points, closer to the 50-75 range. On
the other hand and on a subjective basis, the market did set a new high today, so we
could see some manic buying tomorrow.
During the forthcoming dip, I will be watching the market internals carefully to see if
there is any hint of future move. For example if the the NEW HIGHS and the
ADVANCE/DECLINE remains strong during the dip, the market will probably head
higher and the dip should be minimal.
The BKX today was strong and did set a higher high which is a sign of further strength.
The RUT, XAL, TRAN, FPP lagged the DOW today and still have only rebounded
50% of their losses or less, so they could still be in a bearish mode unless they start to
catch up with the DOW/SPX/NAZ. The question concerning these indexes are whether
they are leading indicators of future weakness, or are they lagging/unimportant
indicators. Only time will tell. For the DOW theorists the TRAN needs to catch up or it
is a negative indicator.
Although this rally has been fast, I am not convinced that we are heading alot higher
(9600-10000 by the end of the year) as more and more are expecting. The forthcoming
dip should give a clue.
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