MG, Re: A View from the Swamp
FWIW As you know, OEX is critical to my trading style. A Bull market will be very forgiving to a flawed entry point; a Bear market will be vindictive.
Clearly, we need to break 636 for the Bull to be alive and well. The charge at it yesterday was probably just premature. It was just too much to expect that run to take it out. I don't consider it to be a negative.
OEX 615 is now my worry point. Frankly, the technicals have still not recovered from the sell-off last week, and that is what you may be seeing as well. The MACD and DMI are on a buy, but not confirmed by the Stochastics.
OEX 600 continues to be my line in the sand. It may also be the developing neckline of a H & S pattern. Really would not be good to see this one broken.
The Weekly chart looks like a repeat of the April-June action (and thus furthering the right shoulder). During that time, as now, OEX had gotten way ahead of its moving average, moved sideways until it caught up, and then took off. It is still on a buy signal, but looking very toppy. I see critical support at 591.
The problem is that we know what is holding up the OEX. SOX and PSE are parabolic. I understand that IBM reports tomorrow and I would expect the run to continue.
The other sectors that feed into the OEX are more problematic. I have TRAN on a sell signal with a failed attempt to cross over the MA and it is quickly approaching horizontal support. The weekly charts show this as just a continuation of the downtrend begun 4/24. Yet, we are still about 2% above the MA.
DRG looks to me like another developing H & S pattern. This one really needs to break the Big R at about 767. Unfortunately (for my LLY) it is still on a sell signal. However, the MACD turned positive, but not yet confirmed by the DMI or Stochastics. The only redemption is that on the weekly charts, we had a very nice bounce off the MA last week. I will not panic unless we break 722.
The PNX chart is a work of art. What a beautiful chart. You couldn't find a prettier trend line. Yet, we are a long way from the trend line support that I show at about 475. It is up almost 60% since the August low, and we got one of those Doji hammer thingies. The action of this sector is probably important to both of us.
BKX is probably of the most current concern. We are a long way from the high of 953 during the week of 7/17. We are sitting right against the critical Big R at 820. I think it will be important for OEX that BKX 820 be taken out in the next few days. Otherwise, I don't see the mo factor that will continue to drive the market.
Thus, is my view. BWDIK and all other disclaimers.
The big question I have to ask myself every day is Bull or Bear. The answer is still Bull.
Berney |
