INDEX UPDATE
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There were some positives in the market, but not sure if they are strong enough to overcome the negativity/narrowness in the market.
The RUT, per my short-term analysis is technically breaking out, since it was a CLASS SELL 3 days ago, which was negated. As previously indicated, on a technical breakout the technicals are basicly useless, and the breakout can stop on the dime or continue. On a subjective basis, I am hearing that the JAN effect is starting early. Whatever, it should not be discounted as a positive sign.
The NEW HIGHs jumped over 100, while the DOW was down 90, so this implies that the smaller stocks could have been rising while the big ones were being sold.
I am not sure how to interpret these positive signals, since I have noticed that on a technical basis, things were a bit abnormal, for example the UP/DOWN reversals at the end of the day on THUR. I am suspecting that year end trading/window dressing/selling may be skewing the technicals a little.
Overall, the mid-term technicals are in the overbought region, which implies that at mid-term TOP is nearby. My analysis is based on time, and I a projecting the TOP in the next 2 weeks, and to narrow it down a little - looks like the end of this coming week (WED,THUR,FRI, NEXT MON). This does not mean that market could not move up substantially in price.
The DOW is heading down over the last 2 days, but I am suspecting that there could be a short upswing over the next few days.
I still do not see any huge movement in either directions, so I am sticking to my trading range position. Since my mid-term technicals are in the overbought region, I feel that it would be a good strategy to hedge long positions soon. I am not saying to sell long positions, but to hedge them with either buying PUTs or selling CALLS.
Feel that there is still strong upside resistance in the DOW around 9300-9400, if it gets that high.
There are plenty of technical divergences which are hinting that a mid-term top may already be in the process if the DOW does not move up in the next few days.
Seeya |
