Tuesday, March 8, 2016

Recent breath trust is reminiscent of...

Recent breath trust is reminiscent of those seen in July 2010 and Nov 2011 but there is also something that is different this time. We are no longer in a bull market, or at least the bull market is not as fresh as it was then. This means we may not see a higher low this time 

As you know McClellan Oscillators went off the scale recently. This is mainly because of the excessive bearishness that persisted for sometime now. In other words, it was short covering as evident from the massive set-backs in short interest across the markets.


NYSE McO

Nasdaq McO

McO similarities between July 2010 and Nov 2011



See the weekly chart of NYSE Composite and ST chart of Crude Oil shown in the post below. Oil already hit the target zone this morning and NYSE reversing from the weekly trg. We identified last week that the next downside leadership index will be NDX. 

Excerpt from yesterdays "Opening Comments";



Opening Comments

March 7, 2016 at 1:14 am by Sol   9 Comments

Value Line Arithmetic weekly, self explanatory


One of the downside leadership sectors of the bear market is Transportation Index. It is currently testing a monthly resistance.


$TRAN monthly



RUT which was another downside leadership index shows a similar picture

RUT monthly


Weekly NYSE Composite vs Summation Index, self explanatory


ES is currently down 5 points from Fridays close while CL is up about 2%. I think this couple is now decoupling. Crude oil clearly broke out, it looks like it is headed to 38.5-39.5 range next
CL daily

hourly



Looking at the short term charts of SPX and ES , I see a clear rejection around ES 2000 level
ES daily

SPX hourly

ES 240m

I am expecting another range bound day with an intraday lower high around ES 2002-2003. I plan to add NQ short  ES tests this level. If we get an early dip, 


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