23 replies to this topic

[IYB]

D, there is some NYMO divergence from the August high and the energy only pushed to close the 1150 gap this week, I think even if there is more upside, sustainable follow through won't come immediately, I tend to think any rally on Monday will be completely given back once again by mid-week...

Just a couple of quick comments before I head out for the day. Arb, thanks for the comments. That there are NYMO divergences from the August high is again very much like 2004's late year rally to which I compare the current one. Then as now, the market had put in a sufficient base in prior months to sustain these divergence, imho:

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&st=2004-07-01&en=2005-01-01&i=p39818252782&a=209405915&r=414.png

As far as Monday rally and give back Wednesday - sure could happen that way. My comment isn't about Monday. It's about Oct/Nov period.

Tech-I wasn't suggesting that someone had made the case the this was an "August 9 redux" and then put up my post to refute that assertion. I was and am only suggesting that this is a question that I for one think that we "should" be asking as traders, because the pattern into Friday on SPX was nearly identical to the earlier August period. When I see that on the charts, my inclination is to ask - "is this a repeat or different from the last time I saw this?" In order to do that, I take a long hard look at context and the behavior of internals. But that's just my way of doing things....not the "only way".

My arguments are not with other posters here - my arguments are with myself as I study the mixed messages always put forth by the markets - looking to ascertain the prevailing trend. And for those who do the same and come up with a different conclusion, that's absolutely okay by me.

Good weekend all, D

[securelstmile]

IYB, thank you for your take. Excellent as always. I especially like the lead the rut has taken. Risk on.

[arbman]

I tend to also think the divergences will sustain at least until the elections, but I think the volatility will be increasing from here. I think 2004 is a good analogy that the market consolidated a good year of gains, many of my comparisons went back to that period early in the year until the jobs growth dried up earlier in the year. Basically, the market did not have enough cash build up while consolidating and Fed is running out of options as USD is once again below 80. These didn't happen so quickly in 2004. I posted in my blog update below, the volatility will be worth trading and building a top than a clear uptrend IMHO. Thanks for your comments as usual, very best...

[orange]

The leadership in the months ahead will most likely remain in the materials and energy sectors

Arbman, do you think the dollar will continue falling ???

It looks like Friday was held up by the banks and energy, while tech lagged. I'm thinking this rally over the past month has brought out risk takers. The RUT which did poor in mid September has started to pull in front of the pack. It did well in last weeks consolidation ...

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=1&dy=8&i=p63376574376&a=210052568&r=7240.png

I figured the banks will prevent any sizable decline here as the big names that everyone crowded into take a breather. Looks like more sideways to up action for next week, assuming we don't fall hard Monday.

http://stockcharts.c...1833&r=5939.png

Edited by orange, 03 October 2010 - 11:46 AM.

[CLK]

IYB, Could you please tell us what you saw that made you abandon (all that you just explained about the bull case) back a couple months ago when you were looking for the last rally into a multi year top of a reassertion of the secular bear ?

[SemiBizz]

Well there's always this you can throw into the bearish pile of August actions ahead of the retracement...

Edited by SemiBizz, 03 October 2010 - 12:22 PM.

[vitaminm]

Ta is in the eyes of beholder!

1/2 macd shows near term trend down as it did in last early August. Also BP ratio is turning up!


http://stockcharts.com/h-sc/ui?s=$SPX...id=p00388764771












http://stockcharts.com/h-sc/ui?s=$SPX...id=p00388764771

Looking at the action of SPX over the last six days, one could fairly easily build the argument that it is a repeat of what we saw in the six days leading up to August 9....and that the outcome will be the same.

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=5&dy=0&i=p23366500307&a=209406260&r=86.png

But would one be correct? My work comes up with a resounding "no" to that question. Why? Well actually for quite a few reasons having to do with the set up over the last 4 months which I see as very similar to the set up in the second year of the last cyclical bull market, 2004, after a half year long IT downtrend. Now, as then, internals improved as prices went down after the NYMO and NAMO low of May 20, 2010. From that point forward here, as in 2004, the market put in a base for a sustained advance.

But rather than go into great detail on that basing process and the advancing internals, let's just focus in this particular post on the last six days as compared to those six days leading into the August 9 top. Notice the action of NYMO over those six day is August, and the action of NYMO over the last six days:

http://stockcharts.com/c-sc/sc?s=$NYMO&p=D&yr=0&mn=5&dy=0&i=p52861189019&a=199263752&r=632.png

Same flat SPX but notice if you will that the pattern of NYMO is precisely opposite now versus August. There it was deteriorating...here it is building. Notice the same for NAMO:

http://stockcharts.com/c-sc/sc?s=$NAMO&p=D&yr=0&mn=5&dy=0&i=p30255520916&a=199263753&r=605.png

And the Russell 2000? There it was declining....here it is advancing:

http://stockcharts.com/c-sc/sc?s=$RUT&p=D&yr=0&mn=5&dy=0&i=p89223609153&a=199263760&r=14.png

And how about TICKS? In august they were deteriorating through those six day....here thay are advancing:

http://stockcharts.com/c-sc/sc?s=$TICK&p=D&yr=0&mn=10&dy=0&i=p65979412138&a=203421539&r=3382.png

Anyway enough examples. You get the point......that this is not August 9 redux. It is the exact opposite according to my work, and I believe that the outcome over coming weeks will be the opposite of mid August....higher not lower, and the the correct trade is long, not short.

For those who believe that "context is everything" as do I, you may find this comparison with late 2004 on the long term charts of interest. Happy trading, D

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=8&mn=6&dy=0&i=p98280175200&a=186901514&r=163.png

[TechMan]

Tech-I wasn't suggesting that someone had made the case the this was an "August 9 redux" and then put up my post to refute that assertion. I was and am only suggesting that this is a question that I for one think that we "should" be asking as traders, because the pattern into Friday on SPX was nearly identical to the earlier August period. When I see that on the charts, my inclination is to ask - "is this a repeat or different from the last time I saw this?" In order to do that, I take a long hard look at context and the behavior of internals. But that's just my way of doing things....not the "only way".

Got it. Mahalo...

[arbman]

The leadership in the months ahead will most likely remain in the materials and energy sectors

Arbman, do you think the dollar will continue falling ???

Do you see any other way?!?!?

Yes, USD should bounce here and it will bring back the volatility... But the first bounces in USD will be sold, so the equities will probably build that top for a few more weeks with higher highs to come ahead of elections...

[SemiBizz]

The leadership in the months ahead will most likely remain in the materials and energy sectors

Arbman, do you think the dollar will continue falling ???

Do you see any other way?!?!?

Yes, USD should bounce here and it will bring back the volatility... But the first bounces in USD will be sold, so the equities will probably build that top for a few more weeks with higher highs to come ahead of elections...

We already had the $Yen bounce and now we have a light volume retest of the high volume breakout, so this bounce wasn't sold. Look for the light volume retest of the low and then watch the volume on the other side of it... as we move back up to 85.