It does appear that all four indices have realigned to the nature that has propelled most of this intermediate term advance. This morning, after a little spike up in the Dow, the SPX/DOW sold off in what appears to be a micro wave 2 bottom. The NAZ/NDX made a slightly lower low early, and then edged up the rest of the day. At the close the NDX was UP, and the other three closed slightly lower. Short term momentum is at neutral. Intermediate term momentum has pulled back somewhat. So it would appear from this vantage point that the market is ready to move forward from here, with the NDX/NAZ again assuming leadership. http://spaces.msn.com/members/caldaroEW/
Friday was quadruple witching day: monthly and quarterly options and futures expiring. On monday, the NDX will have a new leader; GOOGLE: it has been added to the NDX in their yearly readjustment. I believe this is a major positive both intermediate and long term. Short term, as mentioned earlier, we seem to be in the tale of two tapes. The NAZ/NDX wanting to correct, and the SPX/DOW wanting to complete their advance. Thus, the upcoming week should provide a positive bias, until the SPX/DOW make new highs. Then, I believe all four indices will correct short term, completing minor wave 2, before we launch into what should be an explosive third of a third of a third: minor wave 3. We've updated all the 15 minute charts accordingly. http://spaces.msn.com/members/caldaroEW/
Lets summarize. The NAZ/NDX has not been lagging the market, but leading the market lower. On an intermediate term basis, the overbought condition that occurred during the advance has eased and we're now in a more positive neutral condition. The selling of the last two days has created the most extreme short term oversold condition that the market has experienced since the intermediate term advance began. The EW pivot NDX 1658 held firm and the selling abated. What we need to look for from here on out is either a positive divergence, in short term momentum (a lower price low, without a lower momentum low); or a strong penetration to the upside of EW pivot 1671, and then have 1671 act as support. If either of these occur, and we get a five wave advance off this low, we can be fairly certain that the bottom is in. Worse case, we'll have to test EW pivot 1639 before establishing this important wave 2 low. Everything appears to be setting up for another strong advance. Lets see what tomorrow brings. Details as always: http://spaces.msn.com/members/caldaroEW/
I posted this as a comment to a question on my site. Thought it might be of interest: "Hi Passrider, Actually there is a head and shoulders top on the NDX daily charts too. I believe that helped truncate two month advance. I can see your count, and it is plausible. But my daily charts and 15 minute charts: show an 'abc' from the highs to 1674, a 'b' wave to 1711, and now another 'abc' into 1658. If the recent rally is an 'x', we could have another 'abc' into 1639. If not, a retest of lows for all the indices should do it, i.e NDX 1658 and SPX 1249."
Personally, I feel the recent low set up very nicely. The TRANsports are getting the markets moving upward again, the DOW is following, and the NAZ/NDX are preparing to lead the market much much higher. Wave 2 appears to be completed and we are entering the early stages of what should be a dynamic wave 3. Happy Holidays!
Guess the ES or SPX was not done correcting yet. 1260 does look like support though, staying positive.
SHORT TERM: NEUTRAL Needless to say we're not impressed with todays action. Again buying at the open met with immediate selling, and a midday bounce met with last hour selling. The weakness was all the NAZ/NDX, while the DOW/SPX held steady and the TRANsports attempted to rally. We're posting one chart today: NDX 122905. This chart displays most of the story. We've been posting our EW pivot points for weeks now (upper right in blue). The market sold off but held at 1658. When we started to rally, we witnessed the NDX run into resistance at 1690: three attempts to break through failed. We also formed a diagonal triangle by tuesday morning, (a terminating pattern), and the market quickly sold off. Now, 1671 is providing resistance, and the last three days we have failed to break through. Short term momentum (circled in green) was oversold as it usually gets during an uptrend two days ago: the market failed to rally. In fact, after working off the oversold condition by going sideways, the market turned lower. In uptrends, this is how an overbought condition is sometimes dealt with. Now we are getting the reverse. Lastly, the six consecutive days of gap up openings that have failed to initiate an impulsive wave rally. INTERMEDIATE TERM: NEUTRAL We switched early this morning, for the first time in over two months, to a neutral position on the intermediate term trend. Unless the market closes higher tomorrow (friday) the intermediate term uptrend has reversed. In fact, we can consider todays close in the NAZ/NDX/SPX as a 'KEY' closing price. Any close below this level, from here on out, would confirm a reversal in the intermediate term trend. Also, our MMI, the internal measure of market momentum is falling off quickly. Not a good sign for the uptrend either. If the market holds here, and moves higher, we'll get a resumption signal. But with the DOW already confirming an intermediate term trend reversal we're not too optimistic. Thus, a more neutral market position is warranted. And, we took some profits.
Looks like stocks are poised for a potentially big day tomorrow. TRANsports and Russell 2000 making new all time highs in impulse waves. The SOX index also making a new high, and the NYA not far behind. Just need to see the NQ pit get with the program, and stop selling the open, and every rally for the past four days. The NAZ/SPX closed above their 8day and 34day moving averages for the first time in 8 trading days today. Dow managed only its 8dma, and the NDX neither. Only the NQ is holding the market down! Just observing the action http://spaces.msn.com/members/caldaroEW/