Today's price action looks more like a retracement than a reversal. We'll see... In the past when we disagreed you were right.
Since the DOW/SPX continue to rise in spite of the NAZ/NDX I'm taking a very close look at the NDX to determine if we do have a bottom in place. First item of note is the MMI is currently more oversold than it was at the October lows: typical bottoming momentum. Noted on thursday, the RSI gave a buy signal on the SPX/NAZ and NDX at the close, another sign of an impending low. The daily chart is displaying positive divergences on the RSI and MACD at fridays lows. This has not occurred since the spring of 2005. The daily charts for the TRAN/DOW/R2K are displaying a nice double bottom on the RSI with the Feb/Mar lows. On the NDX/NAZ hourly charts there are positive divergences again on the RSI and MACD. Shorter term, the NDX/NAZ 15min charts are also displaying these same positive divergences. In conclusion, everything seems to be aligned for a substantial advance from current levels. It might take one more shakeout to complete the bottoming process. But it is completing!
Thanks for your input, Tony. I wouldn't be surprised to see just about everything rise next week -- stocks, bonds and precious metals. I think a short-term bottom in bonds is near.
I mostly watch the SPX, so I hadn't seen the NDX chart before. What about that obvious H&S formation? What about the longer-term negative divergence in the MACD?
The head and shoulders probably created the selling and continuation of the correction. The negative divergence is normal as it is cyclical on a daily chart, you need to look at a weekly chart. The weekly displays a normal fifth wave momentum after such a strong third wave
Bonds rallied, Goldman Sachs kicked off the earnings season with a great report, and Google won their/our privacy battle in the Supreme Court. Enough incredients for a rally, and to sustain a rally, and rally we did! The DOW posted a new high, as did the NYA and the SPX confirmed its intermediate term uptrend with its own new high. The NAZ/NDX rallied nicely as they appear to be playing catch up. I'm still looking for a NAZ 2313 print tomorrow to confirm a new intermediate term uptrend kickoff in the growth sector. Go Naz! btw, the is a reverse h/s pattern in the daily NAZ chart ...
Nice chart! But how many people really keep longs or shorts in the cubes, when they could just as easily trade NQ ? With Investors Intelligence bullish readings at their lowest levels since May 03: 11.4%, not sire what to think of that chart