Saturday, March 28, 2009

Intermediate Term Trend Reversal

It was apparent over the last few weeks that the selling in the US stock markets was nearing an exhaustion point. As of the close this week I am updating my intermediate term status to Moderately Bullish. The upside target for the DJIA is in the 10000 to 11000 range or about 30% above this weeks close.

While I still believe that we will probably see another stab at the lows, I believe that the absolute price low has been established and will not be exceeded on the downside. Pessimism is so thick you can cut it with a knife but the market is refusing to respond to negative news in the way it had over the past 6 months.

The MACD on the weekly chart has been diverging from the price behavior, part of this is a function of the math but with the weekly MACD, positive crossovers above the signal line are good trading signals. Since this indicator is so far below the zero line, it indicates that we could see a rally lasting several months.

Intermediate term investors should consider allocating funds to equities. The easiest way to do this would be by using one of the Index ETF's - consult your financial advisor.

The Weekly DJIA for 3/27/09
Click to enlarge

Thursday, March 19, 2009

Coming out of the hole.

The McClellan Oscillator is in overbought territory but will probably stay there for awhile longer. The recent selloff was very severe and in all likelihood a temporary trading low has been established.

The McClellan Oscillator for 3/19/09
Click to enlarge

The Percent of stocks above the 50 and 200 day averages.
Click to enlarge

Wednesday, March 11, 2009

The 1937-38 DJIA Template

One mans opinion...
The DJIA from 1937-1938
From Profitable Investing by Richard Band
One Bottom Behind Us - Tue, 3/10/09 - 7 PM ET
Based on the historical "template" from 1937-38. He is
looking for an important stock market bottom this month,
Click to enlarge

Friday, March 6, 2009

MCO for the week

We're oversold and have had a long string of negative days, a bounce can be expected. The one caveat in this market is that the bounce can be put off for a day or two, which isn't so hot. Never the less, I think we turn up next week.

The McClellan Oscillator at Friday's close
Click to enlarge

Wednesday, March 4, 2009

SPX Weekly Chart

The SPX Weekly chart with price time grid
Click to enlarge

Monday, March 2, 2009

Grey Monday

When the market internals fall apart after an extended period of declining prices it is an indication that things are really bad. In almost any other market I can recall, the lows in the McClellan Oscillator would have produced a reversal. What is occurring now is that prices look cheap to people and the market bounces before it can capitulate. This results in the grinding kind of decline we are seeing, it is a slow motion crash.

The McClellan Oscillator for Monday 3/2/09
Click to enlarge

An Update on the DJIA Monthly Chart
Click to enlarge

The original chart was posted on Nov 11, 2008 We hit the trendline but I suspect we are going lower still.