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Hi Dimitris,
Tuesday, November 18, 2003, 9:32:14 PM, you wrote:
DT> Let us see the recent ^NDX behavior.
DT> After a long period we have had [Nov9 to Nov10] the first
DT> important bearish signals, a simultaneous
DT> ~MeanStochD and ~MeanRelSlope divergence. The whole market
DT> looks a bit tired and the bears have
DT> a lot of reasons to wake up
DT> P2 [Nov7] is the second peak of a probable H S
DT> formation.[sensitivity perc=3%]
DT> The trendlines are no longer parallel, a slight converging
DT> wedge is apparent day by day.
DT> If the next days will keep on creating the H S, let us see
DT> the proper action moment.
DT> It is easy [and confusing] to speak after the
DT> facts .
DT> We have more than 5 bars to see any complete form, let us
DT> concentrate in the details [other leading/lagging] indicators]
DT> and add contributions to this thread, but, please, before the
DT> facts.
DT> 15 bars later we may see what was written and make
DT> our comments [or laugh with our great texts !!]
DT> I hope it is interesting.
There is NO question that this market looks very tired. MRSI and RSI
divergences since September are telling. These divergences persist.
However, classic H&S is not indicated at all, to me. The volume
signals necessary to validate or suggest such a position just are not
there . . . unless we use our imagination and get very creative,
which is a violation of TA formation-spotting in my book. But
really, they are just not there, and I don't see it.
The plain fact of the matter, though, is that markets do NOT hold
continuously at ~20 percent above their 200 day SMAs. And that is
roughly where this market has been churning higher for several months
now. In a strong trend of course, that CAN persist for a while. But
it is bound to come undone, and the downside risks here are not
insubstantial -- the longer this unsustainable posture persists, the
sooner it has to come undone. This is an index where even the rather
responsive 18 day SMA has NOT ONCE even dipped below the 50 day SMA
since they last crossed in March. It's an index that is up a
startling 40 percent since March. The only reason in my opinion it
has been able to come this far, is that such a percentage is still
within some acceptable (and even normal) oscillation coming off the
absurd bubble created in the late 90s. But we are somewhat due for a
pullback of some magnitude I think.
But I see nothing right now to indicate a major trend change, and
certainly no H&S as I need to see them. But I see plenty to suggest
that the risks of a major (and I think much-needed) correction are
increasing. That correction could easily take the ^NDX as low as
1200. But that is only about a 16 percent pullback from the recent
highs, and would still NOT indicate a reversal to a bear market.
However, it could indicate the beginning of a broad sideways
oscillation that swing and intermediate term traders might love,
where the ^NDX roams up and down, covering 200 plus points at a time.
All that said, once again I see no signs of any complete trend
reversal at all. But I see a one-way market for 7 months in what is
more often a two-way world. This happens. It happens over and over
again. But IT DOES NOT PERSIST over long time periods, and this one
is getting long in the tooth, IMO. The low-hanging fruit is likely
to have been plucked, and the road ahead may be more "interesting"
that the road just traveled. I think many of these stocks will be
available for decent long opportunities at better prices than we are
now seeing.
Yuki
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