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Realtraders,
I would like to share some observations regarding the current market
enviroment. Take a look at the weekly chart of the Dow Jones Industrial
Average. You will see that it put in a high of 9367.84 the week of
7/24/98. This was the all-time high for the DJIA until the week of
11/27/98 (9380.20). The market stalled at this level and failed to hold
the new highs. Now turn your attention to the week of 1/8/99--a new
high of 9647.96. At the time it seemed that the Dow was just confirming
the S&P and Nasdaq that had already posted new highs. But the very next
week (last week), the market was again unable to hold the gains and fell
back below the 9380 area. Yesterday, the market was well above this
level, but AGAIN COULD NOT HOLD THE GAINS. I am saying that this level
seems to be a significant pivot point. If the market can hold gains
above this level, it should make a retest of the highs, otherwise, I
would look for a retest of the recent lows (9080 area).
Other observations (reservations):
The Dow Jones Tranportation Average is no where near new highs, and is
not confirming the price action in the other market averages.
On the 3/10/16 MACD, there are sell divergences on the weekly & daily
S&P, daily Nasdaq, and the daily & weekly DJIA charts.
Yesterday's last hour was extremely weak (some believe a weak last hour
is caused by selling by "informed" investors--any stats to back up this
indicator?)
Yesterday's S&P's price action was a harami (Japanese candlestick
lingo)--which is supposed to indicate indecision.
The Nasdaq failed to hold above its old high (including today's action).
Amazon.com (momentum leader) has broken a bullish trendline (when drawn
on a semi-log chart----is this valid? I don't know).
For me, I don't call a top until three things happen:
1. The market breaks a bullish trendline.
2. The market fails to make new highs (lower highs).
3. The market breaks through support (lower lows).
The March S&P futures contract broke a bullish trendline (connect the
lows of 10/8 & 12/14 and extend right) on 1/13/99. It has since moved
above this trendline, but not convincingly. Right now, I don't have
enough evidence to call a lower high, so I will call it a trading range
between 1290.5 (1/8/99) and 1210 (1/13/99).
These observations are decidedly negative, but both the S&P and Dow are
setting up a weekly inside bar. I would not want to guess which way the
market was going to come out, but 9367 on the Dow should be a good pivot
to trade off of.
Thoughts? Comments??
Bill Bancroft
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