Wednesday Market Momentum Breadth Volume
Disclaimer: All charts and comments are intended for education and discussion purposes only. No investment recommendations are being offered. Please do your own research and take responsibility for all investment decisions that you make. Questions and comments related to this post are encouraged. | MON - Sector Strength | TUE - Interest Rates | WED - Market Breadth | THU - Commodities & Currencies | FRI - Market Sentiment | SAT - Bullish Percents | About | contact: HeadlineCharts@gmail.com |
Ken Tower downgraded the near term trend to neutral yesterday, and today expressed added concern about the rest of the year based on the housing crisis and the lack of access to equity loans. Trim Tabs on the other hand continues to see a behind-the-headlines pick up in the economy based on tax withholdings, job demand, indications that housing is bottoming, and huge sums of cash on the sidelines in money market funds.
HeadlineCharts remains neutral on the market. On the plus side, prices remain above key support and moving averages, interest rates are gradually rising from extreme lows and sentiment is very favorable from a contrarian point of view. The negative is that the market still seems to be forming a base rather than starting a new uptrend based on the level of new lows.
These indicators are good news for the market. The bullish percent for the financials remains above the important 50% level and appears to have finally stabilized, at least for now. The S&P 500 is evenly divided between stocks trending higher and those trending lower. The balance needs to tip in favor of a majority in an uptrend in order to move this index higher, but for now I think this level is favorable.
Yesterday it was mentioned that energy and commodity related stocks were probably ready for a pause, and that we should watch for some strength in tech and industrials. I should have mentioned that the industrials have been strong for a while, but now tech may be making its move from very favorable field position. This is a very good development because tech shares tend to respond only when there is an uptick in the economy.
Last week the market broke above the 20-week mid point of the bollinger which was a very favorable development. Now we need to see that it can retest and hold above the mid point, and then again close the week in the upper half of the bollinger. If that happens it would be fair to label the next price target as the upper band currently near 1480.
I just love this chart based on Connie Brown's use to the RSI support levels. Based on this chart, it looks like stocks have been in a bull market since 1980 or so, and that the 2000 dotcom bust was just a correction of a wildly overbought market.
The 50-month average and the uptrend line have been significant support a number of times, but the real picture is shown in the RSI level right around 45. Based on the RSI, the 2000 price decline was a serious bear market, but the current financial crisis is similar to the 1987 crash and looks more like a severe correction within the long term uptrend.
It doesn't really matter how you label the past price declines. It is just important to note that the market found support right where it needed to if the long term uptrend is still intact based on two based on several basic technical indicators... a momentum oscillator, a moving average and a trend line.
Check this out. :-) Who will be the winner in the next few years?. (Comment this)