Price momentum is down, but traders should wait a day or two before building a short position as the market has some short term rally potential. Our stop is a daily close above 1327.
http://www.youtube.com/watch?v=L56W-uyUHus
Saturday, April 16, 2011
Wednesday, April 13, 2011
Tuesday, April 12, 2011
Monday, April 11, 2011
Thursday, February 3, 2011
DeMark - Where to Set Your Stop
Per Jason Pearl's interpretation of DeMark's methodology, the Dow Industrial Index sell signal would get stopped out with bar 13's range added to the top tick of bar 13. So a close much over 12,097.90 would stop out the sell signal. 1.618 times the range is 12,168.95, a more lenient stop, but obviously adding to your risk level. That being said it's so rare to have a monthly, weekly, and daily sell signal line up almost perfectly in all the major indexes...
Saturday, January 29, 2011
Breakdown
I've been detailing the bearish technical conditions in the market for the past few weeks now, and with Friday's strong close down, which qualified as a bearish price reversal (a close below .8 standard deviation from the 10 day moving average) in all the major indexes, I believe the correction I've been anticipating is now occurring. Judging by the extremes in sentiment and the long running divergences in breadth, the correction could be very significant.
In my last post I noted the Dow Non-Confirmation as well as the other riskier indexes breaking down ahead of the Dow Industrial average. Despite the strong move up Wednesday and Thursday, none of the secondary indexes managed confirm the Dow's high, in fact Friday the Transportation and the Nasdaq indexes managed to break the last swing low, with the Russell following close behind.
Chart 1: Dow Theory
So for now, with the sentiment extremes, the momentum extremes, the divergences in breath, and now mechanical signals telling us to sell the market, a very negative view is appropriate until at least some of these signals reverse.
In my last post I noted the Dow Non-Confirmation as well as the other riskier indexes breaking down ahead of the Dow Industrial average. Despite the strong move up Wednesday and Thursday, none of the secondary indexes managed confirm the Dow's high, in fact Friday the Transportation and the Nasdaq indexes managed to break the last swing low, with the Russell following close behind.
Chart 1: Dow Theory
So for now, with the sentiment extremes, the momentum extremes, the divergences in breath, and now mechanical signals telling us to sell the market, a very negative view is appropriate until at least some of these signals reverse.
Thursday, January 27, 2011
Non-Confirmation Continues
A continuing theme, the Dow continues to traverse the psychological important 12,000 round number. This has seemingly garnered a lot of excitement; there is no shortage in supply of wildly bullish guests on CNBC ready to proclaiming the market will continue to move strait up. Again proving the Milgram experiment valid, the masses seem to be nodding blindly to this community of "professionals" despite them missing every major turn in the last 10 years. Meanwhile, I've been noting the deteriorating internals, the extreme sentiment, the overbought momentum, and now the other indexes seemingly topping out, thus the Dow Theory Non-Confirmation continues...
Chart 1: DJI, Transports, Nasdaq, Russell 2000
The Nasdaq appears most willing to break to new highs, though with today late day reversals in Microsoft and Amazon, I'm not sure this will happen. Meanwhile the transportation index and Russell 2000 still appear to be correcting from their first thrust down, and are running into Fibonacci resistance.
Chart 1: DJI, Transports, Nasdaq, Russell 2000
The Nasdaq appears most willing to break to new highs, though with today late day reversals in Microsoft and Amazon, I'm not sure this will happen. Meanwhile the transportation index and Russell 2000 still appear to be correcting from their first thrust down, and are running into Fibonacci resistance.
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