Friday, December 19, 2008

Update

The DOW is currently up 65 points – gee, I guess $13 billion doesn’t buy much these days, no?

The real point of my update here is to point out that we just generated sell signals on the daily stochastic of ALL the major indices except the RUT. Below are 1 month daily charts of the DOW and SPX:





This does not mean that I am short yet... the 60 and 30 minute stochastic are on fresh buy signals.

I note that TLT is down this morning and back inside the range of the daily Bollinger, but still outside the upper weekly Bollinger. The VIX is continuing down, it has given up 7% already and is at 44, just beneath the bottom Bollinger band.

So, we’re beginning to see some short term signs that this “rally” is getting tired. I note that the market is still where it was 2.5 months ago. Take a look at this 9 month WEEKLY chart of the DOW below. I turned off all my drawings so you can see the pattern more clearly. Note that if we close in this range that we will have our second weekly “spinner” in a row. The weekly stochastic is on a buy, but looks weak, and note the “Death Cross” above, where the green 50 week moving average crossed the red 200 week moving average last month. Of significance, also note that the 200 week moving average has turned down. This is very rare. Once a moving average has turned down, it becomes stronger in terms of resistance. Not that we go that high, there’s no way we get there in this environment. Also take a look at the volume pattern here for the weekly bars. I still see declining prices equals more volume. This corrective move will be over when the volume can no longer sustain prices at this level. We are getting closer to that point in time.