Tuesday, January 13, 2009

End of Day 1/13

A mixed day, the laggards yesterday were leaders today with IYR up 3% and the XLF gaining 1.4%.

For the day the DOW LOST 25 whole points, the S&P was UP .2%, the NDX gained .1%, and the RUT lead by gaining 1.1%. Notable was USO which gained 3.9%, and on the opposite end of the energy spectrum, UNG lost nearly 6%!

Internals were also mixed but advancers generally lead decliners by a small margin. I do note that the number of new 52 week lows is rising, especially on the NDX. Today’s back and forth movement MAY have created a very small movement on the McClelland Oscillator… if it did, it would mean a large movement is coming soon, direction unknown. I’ll find out later this evening and let you know.

From a technical perspective today was generally a day of indecision or consolidation. The major indices all created doji candlesticks, and all closed beneath their respective 50 day moving averages except for the RUT which closed right on top of it.

Volumes were higher on the day across the board and another general statement that can be made is that the daily fast stochastic is reaching oversold territory. The slow stochastics are in the middle range and have room in either direction.

Let’s start the charts tonight by looking at the XLF daily. Here we see that it managed to regain the lower Bollinger and the up volume is considerably higher than the previous down volume. Again, the fast stochastic is oversold:

Next is the DOW one month daily. That’s a doji candlestick (indecision) that got very close to the 100% retrace and bounced. Higher volume on the day, but another down day, and again oversold on the daily fast stochastic:

The daily SPX chart looks like the DOW, but has a black doji instead, barely. Let’s look at the 20 day, 30 minute SPX chart instead. Here you can see that the 860 to 870 area offered support today, and that a rally could never get traction. This worked the 10 and 30 minute oscillators higher in their range, but the 60 minute is just coming up out of oversold. This is a mixed reading that allows for movement in either direction tomorrow:

Interestingly, the VIX moved down 5.6%, spiking down into and after the close. Could we have finished wave 4 and are about to embark on wave 5 lower? Possibly, if so we’re about to go higher with stocks. I’m not convinced either way yet so I won’t put up the chart, I note a slight positive divergence in one of my oscillators.

The Transports finished off 1.2% today and I note that they did go below and closed below their previous lows back in December. The bad news in transports keeps rolling in; remember that the transports are a leading indicator.

Bonds are pushing my limits by being right up against the upper boundary of their channels. I note that the TNX produced an inverted hammer which is often times a reversal hammer. If it confirms tomorrow, that would send bond prices my way, which is lower. Here’s a three month chart of TLT showing the channel and how it rose right to the top on lower volume as prices moved up. However, note the new buy signal on the daily stochastic… that would have to reverse or my short TLT play is early. Here’s another thing to consider about that play… if we are working on a right shoulder, we are six days into it and I count at least 7 days on the left shoulder. If symmetry is going to hold, we should be starting down here soon. Again, if we break above this channel, I am O-U-T out!

So, in summary, today was a mixed day that showed indecision. We still have buy signals on the weekly charts and sells on the daily but are approaching oversold. One more push lower or do we go higher?

Well, we are still in the range we’ve been in for 3 months, so my answer is that I really don’t care as I’m not going to play large one way or the other until we break one way or the other (get below 856 and then 840 would be bearish). I don’t have to play everyday and I don’t have to make a call on tomorrow’s direction everyday. Some of the people I follow are leaning bullish tomorrow and some bearish. How’s this? I’ll let you know how I feel about tomorrow’s direction the next time the clock strikes 4:00 PM Eastern!

Hey, any day you’re alive to laugh at the foolishness is a beautiful day!

U2, Beautiful Day: