Friday Markets After the Close
COMPQ prices didn’t move much again today consistent with yesterdays candlestick indicator. It appears we will have at least a couple days of sideway consolidation before the next push higher. It was the same story with most indexes except the INDU which hit new highs on strong volume, and the MID which had a red hanging man (at the top of a range this can be a sign of a trend reversal). Together with yesterdays small and mid cap weakness, it appears there is the potential that the small caps could be experiencing the first signs of developing a pivot top, but it isn’t clear yet what the impact is on the intermediate trend. The COMPQ internals were neutral to weak, consistent with a consolidation after a nice run up in prices. The OBV and MACD are still supportive of prices, but the RSI indicator is clearly overbought and signaling that at least a consolidation will be occurring. The SOX index is holding above support, the McClellan Oscillator ticked down which are both positives for the market. However, the big negative is five-day trend of the put/call ratio down to very low levels, and Wednesdays II Sentiment report of extremely high levels of advisors sentiment. These indicators show a very bullish and complacent investing public and this quite bearish for the market.
Bottom line: The market is in a well-defined up trend although it may now be ready to pause for a while before it makes its next push higher. Longer-term, the various market indicators are near prior peaks indicating that the end may be getting closer for this intermediate cycle rally that began mid June.
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