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After looking at the charts tonight I believe we will begin to move into
the DJIA's first correction in some time. I originally thought the
indexes had to move higher before they would correct. i.e., move much
higher than the August highs, so the correction would stay above old
highs. Part of my reasoning behind why I had originally thought that
was. That of investor perception of the market. If the US and Iraq were
going to battle, then there was this feeling that the market movers and
shakers didn't want to worry the general public too much. As well as
complicate matters by creating a technically sloppy chart. If the US /
Iraq problems are being resolved in some manner other than gunpowder.
They can now take their profits and deal with the sloppy charts. Anyway
these were some of the things that went into my earlier thinking.
After looking at NYSE breadth I can see the DJIA now pulling back.
I am looking at the same ole things:
New highs minus new lows after moving sideways is beginning to move
lower.
Total volume had been drifting lower but is now moving up on a down day.
Up/Down volume ratio - the momentum is slowing as measured by its 50 day
and 10 day MAs. (The general rule of thumb is that if the ratio is above
2 on any given day the market will be up, below 1 the market will be
down, and between 1 and 2 the market will not make any significant move
during the day.)
Of course the final confirmation is the break in the up trend channel.
Harley
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