http://www.traders-t...showtopic=65500
After the last rally, we are now close to a ST top.
(i) internals are now reset to a place (w.r.t. 10EMA), where we could be at ST top and are ready to go down.
(ii) Sentimentrader is now ultra-bullish.
(iii) VXN closed the gap, and has now opened a gap above. An attempt to close the new gap will likely take NDX down.
IT context still looks like "chop near the top while turning down". Internals are now significantly weaker, but the indices held strong. NASI is below zero.
I plan to add the remaining shorts on any pop in NDX tomorrow with stop near the unfilled gap.
I could have added that TT board had highest number of fully long bulls in a year or so, and xD's secret sentiment indicators were at their bullish extremes. Happy to see that the forecast worked so well without those additional observations, except that I did not get a chance to add index shorts like I wanted on this possibly last pop. This morning (night in India), I was at my sister's wedding. After coming back, I decided to add few individual shorts instead of index shorts. I was watching ATVI for a long time, and finally it broke down a six month trendline on volume. I also shorted OIH (weak 15 day bounce is over) and HOV (weakest stock in housing sector).
The current read of overall market:
(i) VXN did close the gap and bounced up. Isn't it beautiful? This bastage never leaves a gap open for more than 2-3 days.
(ii) None of the internals I watch (NAA50R, NAMO, NAHGH, NALOW) is oversold. So, decline has room to continue.
(iii) Sentimentrader tilted towards excessive pessimism ST (although IT sentiment is still excessively bullish). Same thing is visible in flying CPC. So, sentiment picture is not supportive of further decline.
There are two ways to resolve this, and for that we need to know whether the IT context is 'chop before the drop' or 'slow and steady decline'. If the first, the market will chop at current level for few more days, until the sentiment improves before commencing further decline. What I suspect, however, is that we are turning into the second category for NDX. Noticably, NASI opened another fishhook. So, we may have steady grinding decline for next few days.
I am fully short now and will wait to see whether the market wants me to stop out or continue the trade for another 3-4 months. What will puzzle me most? NDX going up over yesterday's high. In that case, I will stop my IT trades and get back to drawing board.
