2 replies to this topic

[IYB]

While this week's sell off was serious, I believe it was merely a harbinger of a larger sell off from a further new high which will likely come in February. It was a warning shot. It is my opinion that we haven't yet seen the SPX high for this Intermediate Trend, though we are getting very close, both in time and points. I am labeling Thursday's Seven Sentinel's Signal as a move to "Neutral' for the reasons cited here which lead me to believe that the final high of this move, while close, is still ahead of us. {I reserve the right to move to full sell signal, of course, if condition warrant. }

Below are just a couple of many reasons I expect further new highs before the "real deal" IT sell off....

The most recent high on SPX was accompanied by an NYSI reading of **1077** on 1-19-10. Typically the last high on SPX is accompanied by reading much lower. In fact he highest reading I could find for a final SPX peak before an IT decline in the entire last decade was the 790 reading in March 2004 when SPX peaked at about 1160 prior to an IT correction:

http://stockcharts.com/c-sc/sc?s=$NYSI&p=D&st=2009-01-17&i=p68599505365&a=177887942&r=8967.png
http://stockcharts.com/c-sc/sc?s=$NYSI&p=D&st=2003-01-01&en=2004-07-01&i=p99255567532&a=182316470&r=414.png

Meantime internal measures such as new daily highs were still *increasing and setting new highs* at last week's SPX high point. Typically they will begin to contract on subsequent new SPX highs just before the final high of the IT move.

http://stockcharts.com/c-sc/sc?s=$NYHL&p=D&st=2009-01-01&en=2010-05-01&i=p25116897300&a=173216386&r=9470.png
http://stockcharts.com/c-sc/sc?s=$NYHL&p=D&st=2003-01-01&en=2004-05-01&i=p05914757817&a=173216314&r=4016.png

Good Trading, D

[Rogerdodger]

Hi Don. Thanks for sharing the great charts as usual. I take no exception to the possibility of "I believe it was merely a harbinger of a larger sell off from a further new high". However I do have a problem with applying the normal significance of the 52 week new high vs new lows following the March crash because of the climactic depth of those lows. It doesn't take much now to make a new 52 week high. But it takes a great deal to make a new low. Additionally, comparing to the 2003 chart is also troublesome since the 2003 low was a third bottom covering nine or so months rather than a climactic "V" bottom. I just think this muddies the water on the significance of this indicator. FWIW

Edited by Rogerdodger, 24 January 2010 - 01:25 PM.

[IYB]

Hi Don.
Thanks for sharing the great charts as usual.
I take no exception to the possibility of "I believe it was merely a harbinger of a larger sell off from a further new high".
However I do have a problem with applying the normal significance of the 52 week new high vs new lows following the March crash because of the climactic depth of those lows.
It doesn't take much now to make a new 52 week high.
But it takes a great deal to make a new low.

Additionally, comparing to the 2003 chart is also troublesome since the 2003 low was a third bottom covering nine or so months rather than a climactic "V" bottom.

I just think this muddies the water on the significance of this indicator.
FWIW

Thanks Roger. Point very well taken on the Y-O-Y new highs. As mentioned though, I follow dozens of measures of internal market strength, net NH's being just one. And the picture I see pretty much across the board convinces me that the SPX highs for this Intermediate Term Trend are still ahead of us. Here, for example, are the cumulative volume measures for net advances on NAZ, showing the same pattern of confirming data as recently as last week. It is my opinion that we will see some unconfirmed new highs before an IT decline begins. Others will disagree. That's as it should be.

Regards, D

http://stockcharts.com/c-sc/sc?s=$NAUD&p=D&st=2009-01-01&en=2010-05-01&i=p99621483544&a=189753644&r=292.png

http://stockcharts.com/c-sc/sc?s=$NAUD&p=D&st=2004-01-01&en=2005-05-01&i=p05807827654&a=189754936&r=6774.png