THE TECHNICAL PERSPECTIVE: CLEAR SAILING FOR THE BULLS
By Decision Point:
Looking at the S&P 500, a new Thrust/Trend buy signal was generated on Monday, changing from a neutral stance. Specifically, the signal was generated by the PMO (Price Momentum Oscillator) and PBI (Percent Buy Index) crossing up through their EMAs. The Thrust Component signal was confirmed later this week when the upside 20/50-EMA crossover occurred.
The Dow generated a buy the previous trading day, and we are now left with only the Nasdaq 100 still on neutral, needing a PBI crossover to occur. As you can see, this will most certainly happen by today’s market close. Note that the 20/50-EMA crossover has already taken place.
Bottom Line: Most of the indexes and sectors we track are generating buy signals after having been in neutral for about six weeks of market correction and rebound.
I analyzed these charts and I really don’t see ‘clear sailing for the bulls’. Trend lines for the NASDAQ and SPX has a maximum 5% left. The PMO for the NASDAQ has declining tops (downturns in the Nasdaq are accompanied by lower tops for the PMO). VIX RSI is around the area that produces spikes and it is in the 17 dollar region (GS has a target of 16 I believe). PMM % buy index is very much like the MACD, something that is late to the game on both sides. Like I said, my analysis says there is around 5% left in the indexes and I am willing to bet that. Since I am little by little. Will keep adding to my shorts.
“Clear sailing for the Bulls”
The S&P Mid cap has broken thru the Jan2010– High
The Value Line Geometric (Unweighted Index) has broken thru its Jan 2010–High
Volume (4 billion) is adequate on this move.
The S&P 500 is being overshadowed by relative underperformance in financials- irregardless of GS
There is relative underperformance by the TECH sector–irregardless of Appl
LT Big MO–still positive YOY
Whats not to like? Technically
Money is moving around trying to find new opportunities and looking for winners in this economy.
Did I say “Economy” –what Economy?
Macro View–The Economy has a critical Illness–enjoy the RX while you can.
I just wanted to add the RUSSELL 2000 (which has been making new highs) is pretty much spent for the moment. Both on the daily and weekly charts it is hitting right at the top of the channel. For things to continue up the large caps have to pick up the baton to lead as the small caps will begin underperforming…I am short the RUSSEL.
I like your thinking right now James….
clear sailing? i guess it easy to say that after a 121 point up day on little news. but volume is still low, unemployment high, etc, etc, etc. and the indexes are nearing there 62% retracements, while the vix readings are getting extreme.
nice to see everyone getting so bullish, maybe it’ll be time to short again soon.
TPC, I have a question about the ER. In your recent ER update it dipped below 1. Did I remember correctly that you used the “ER below 1″ as an indicator to avoid the 2007/2008 crash?
Thanks,
The DOW/SP500 counter trend rally suggested earlier, should continue for a bit longer before the main downtrend resumes.
EURO daily chart warns of a counter trend rally soon.
DOW/SP500 weekly charts are bearish/neutral.
A substantial US dollar rally should occur this year when DOW/SP500/EURO resume their downtrend.
I definitely agree with you about the euro dollar index being immensely oversold right now. If I could trade futures I’d probably begin buying the euro dollar index. The USD index at a glance really doesn’t seem the overbought though, which is weird. I don’t know if we will have any great rally just due to the fact the euro will go down though. I mean, the EURO has remained sold and downtrodden while the dollar has remained flat (after a really from 72 to 81) and we are near January highs on the indexes (and have made new highs on indexes).
I am not someone who is calling for a crash or whatever. I just seek to trade the waves…I always said that this year should be a pretty boring year and a stock pickers year. I could be wrong. But I think it looks like 2004 more than 2007, 2008 and 2009. We haven’t moved more than 600pts on the DJIA + or – in like 6 months…If that isn’t range bound then I don’t know what is.
Sorry, meant to say any great rally just because the euro goes up*