Wednesday, February 17, 2010

State your case

I think my readers know where I stand but here is a chart that can go either way.

The NYSE composite bounced off critical support (as drawn plus the 200-day average) but remains below critical resistance (the earlier Feb high and 50-day average). Volume on the big push Tuesday was weak. Volume during a similar push in July was also weak.

Basically, I can make this chart say what I want it to say.

What do you all think and why?


joed said...


Maybe, just maybe DXH0 may be in a S/T H&S top lending the potential for a S/T btm. in ESH0. A coin toss

Paul O'Cuana said...

I'm a real novice so the first thing I did was put it on to get a better look.
With exponential MA's the 200 DMA and the 50 DMA look much more like support and resistance although this is the first test for the 50 DMA.
Like the two handed economist, if we breakout above the 50 DMA maybe we can see a more satisfying top, like a double.
On the other hand, a break below the 200 would find support at the July low around 5700.

Paul O'Cuana

Will said...

ADX has been trending up hinting that the move down is a new trend, rather than a correction. Meanwhile every single up day since the February 5th low has occurred on falling volume, and down days, have occurred on sequentially higher volume, hinting the rise is corrective rather than a new leg up. Most sectors have been moving in lock step, but the BKX, XLF and JNK, areas more sensitive to the credit crisis have been under-performing and lagging the general market.'s short term sentiment indicators have risen to short term bullish extremes despite only recovering about half of the losses from the January high; it seems like the market is partying before finishing the race.

One last thing... this morning on the open I notice the put/call ratio shooting up to 1.4 or so... about 4.5 standard deviations from the 200 day moving average. Then it fell for the rest of the day but still finished up from yesterday's close... on an up day. Odd behavior indeed. Someone on the open large enough to really move the needle wanted a ton of puts for... well, something. Meanwhile the dollar moved up with the market as well.I don't trade conspiracy theories but you see odd things like that and you just get the feeling that someone knows something... like the PIGS bail outs are going to fail. It happened before Bear Sterns failed...

PD Quig said...

I'm running mechanical systems in my trading account and am 80% 1x short ETFs in my retirement accounts from 1095. I can wait a LONG time for the inevitable point where the rug gets yanked so hard by an event that even Da Boyz cannot dance on it. This rally has been fundamentally absurd for many months. USG data has been shamelessly manipulated and the Fed and team have put a bid under this market to a laughable degree. Mondays and after hours account for the bulk of this low volume puke rally. If you thought Lehman was bad, wait until the sovereign debt crisis hits.

Jay said...

A stubborn technician is not the best technician. Use the 50/200 ema osc as trend indicator for the SPX. Not so sexy but very efficient!

Michael Kahn said...

The one observation I can make is that commenters on this blog know what they are doing and not just because they are worried about the market like me. This is all good analysis (even by the novice )

I'd love to hear from more readers who totally disagree with me.

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