Tuesday, January 22, 2008

Post Toasties

So far this blog is in the testing stage and for entertainment purposes only.

Recap.

For the DJIA daily, today was the:
109 TD Cycle CIT - from the Mar-14-07 and the Aug-16-07 spike lows
13 TD nominal trading cycle CIT which could produce the left side of a 13 TD bottoming pattern.
It appears that these two cycles were stronger than the intraday ones I posted in my previous chart, MS market made a dope out of me, sigh.

The MCO is at –140 + 3.34 and reasonably oversold enough for a bounce. The +3.34 change indicates the possibilities of a large move in the next couple of trading days, I expect this to be a move up.

The 10% Index, component of the MCO was –429. I view this as positive, since it has stayed above the –500 level.

The MCO, 10% Index and SUM index all have rising bottom patterns across the Mar, Aug and Jan lows. This is bullishly diverging from the price action which made lower lows today.

The New Highs – New Lows spiked again to –867 but is still above the August 07 reading, again this is a positive divergence so far.

The TRIN is more or less inconclusive but the 5 day average is at 1.79, oversold.

The 12-26-9 MACD on the INDU sucks (a technical term)but it is so oversold that a good sized bounce could be expected. Because of the negative momentum, it will take some time to turn the market, a "V" bottom reversal is not in the cards.

On the 65 minute INDU chart, all indicators are oversold and ready to turn higher. I expect a rally to start the bottoming process.

The VIX is indicating fear.

Plus the other bullish percent indexes are extreamly oversold.

A number of stocks are now resisting further declines, or at least they are fairly quickly recovering the losses after a spike. This type of behavior is what keeps the A-D measurements like the MCO and 10% Index, as well as the High-Lows Index from going to new lows.

After looking at over 1000 charts on the weekend I can only conclude that the market was split into two sections. A good number of stocks have been in declining trends for about a year and most have declined well over 35% from their previous highs. This qualifies as a bear market for these stocks.

The other half of the market, primarily the larger caps, energy, basic materials and gold stocks continued to rally throughout 2007 and peaked in the third and fourth quarter. In effect, the SP500, INDU, COMPX, NDX etc masked the declines in the other issues. With the negative credit news, this group of Index stocks declined more rapidly into the January low.

There is a considerable amount of fear among the participants, this leads me to believe they will favor large caps, energy and gold stocks initially. The best bargains are in the other issues but they may take some time going sideways.

1 comment:

textuel said...

George, looks great so far. I haven't had time to examine the charts yet though or work through your comments. Just wanted to say hello.