SP500 Technical Warning

The number of SP500 stocks above there 200 day moving average is different this time.

See red vs blue circle on chart...

New highs in SP500 cant be trusted...


UPDATE : I made this call in MAY, this time I am watching these indicators for divergence to see if there will be a plunge down.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=94844

 

Thanks for the stat, you're right, it IS different this time.

 

I agree..I have taken all my longer term holdings to defensive positions now that we had hit the 1500 area again. I am now 20% into Rydex Funds (100% and some 200% inverse S&P). I will keep scaling into the Rydex Funds for every 20 pts higher on the S&P...1520, 1540, 1560, etc.

This same strategy worked great the last times we busted above 1500.

 

It could just as easily indicate an oversold condition and the beginning of a powerful rally, just what you might expect prior to a breakout.

 

Looks like strong divergence to me. Look out below?

 

Yes this is true, but the oil sector with the latest run up in oil prices has drug the S&P index up by the back of the neck..how long will that last (especially if oil breaks and holds below the $87 level for any period of time).

 

Yes, the writting is on the wall.

I bought heavy into the dip of about 10 days ago..or so, Financials/Banks and some blue chips.

After watching the S&P on friday, all day and having the run up before the Feds, I sold out of all my positions.

Now we have the S&P signal, Talk of the Feds not cutting rates this week, talk of "Wheet" hitting all time record highs in 08 (signal of inflation? or supply and demand), you have home prices still falling, subprime halts on lending (No more consumer ATM for the middle class).

The only positive news is the bullshit about IRAN stopping their "Nuke Production". That is the black swan that will catch most...when it appears.

IMHO the Xmas rally is over, next move up is a bulltrap, however, I am not willing to pick the top. I will sit this one out and re-enter after I see us break the lows of Nov/dec... In otherwords, Im taking off the next month to enjoy life...

 

Sounds like it's time to load up for the monster rally. Thanks for the tip!

opm8

 

Sure, load up for the "monster rally"....LOL....if you missed this last 900 point run, i would suggest getting a job at walmart.

Thats the tip.

 

Thanks, Nostradamus.