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This is very tricky stuff! On Monday I suggested that while the NYSE AD
volume was extended, there is room for it to get more extended and the
little respite gave it a bit more breathing room. That possibility is still open
however I suspect it may now be a push just to get back to the major trendline
before we get another decline.
Attached is a weekly chart of the SPX showing the big picture. That major
trendline is at 1190+- and I suspect it may hold for now.
What should not be taken lightly is the shift in the way in which the
market is viewing risk. This is most clearly seen in the yield spread between
treasuries and junk. (See attached chart of spreads versus the SPX). The stage
may be set for more rumors of hedge fund blow-ups and other problems and the
market will react much faster so trading risks are now elevated.
I think what yesterday's recovery tells us is that Mr. Market would
like to coil underneath that major trendline and then attempt another punch
higher. That may or may not happen depending upon external forces/events. I
think that the market is also telling us that the volatility is going to tend to
the downside direction.
Earl
----- Original Message -----
Sent: Thursday, May 12, 2005 7:04
AM
Subject: Re: [SM] Re: [RT] Re:
[e-mini_traders_anon] Re: sp500...up, down, then....
--- EAdamy <eadamy@xxxxxxxxxxxx>
wrote:
> NYSE AD Volume (5 minute) shows strong bullish divergence
at the Emini low
> and the NASDAQ shows modest bullish divergence. That
last drop was violently
> reversed.
>
>
Earl
Thanks Earl, Ben, Ira...
. Later, as markets rallied,
appears to me that the internals were not as good
as one would want for
such a strong reversal. IMO, today, we go up, how far?
maybe 1178/79, from
there all depends on conviction of buyers, whether market
can overcome that
stiff resistance zone to 1183....but, strong support around
1169/71 should
hold up. I am bullish short term, on longer timeframes, I
am
indecisive.
Ithought this summary below was quite indicative of the
internals yesterday:
"These numbers are all well and good,
especially after the earlier troubles.
Whenever the market is down big and
it can recover into the close this shows
you some sort of underlying bid,
and you do not want to ignore this. The market
internals though are not as
"nice" as I would like to see them. We had NYSE
volume decrease 4% to 1.84
billion shares while the NASDAQ volume fell by 7%,
to 1.77 billion shares.
I would like to see stronger volume on a reversal day.
Next, on the
NYSE there were 66 new 52 week highs vs 68 new 52 week lows. This
is the
first time in several days there have been more new lows on the NYSE.
On
the NASDAQ, where lows have continued to lead there were 45 new highs
and 95
new lows.
Next I look at the Advancing Vs Declining issues on
both exchanges, and this is
where my real disapointment comes in. On the
NYSE advancing issues led
declining issues by a ratio of 18 to 14, while on
the NASDAQ decliners lead
narrowly by 16 to 15. Neither of these are stand
out numbers, but I like to see
strong leadership in advancing issues in a
bullish market. I am going to
continue to keep an eye on this, as well as
the new highs, and if there is not
some better action soon I am likely to
turn much more cautious going forward. :
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