3 replies to this topic

[Islander]

There are long standing rules of thumb about new lows that say there is little need for concern until there have been several consecutive days of more than 40 new lows on the NYSE and 70 on the NASDAQ. The table below shows new lows for each exchange on each day last week. The NYSE exceeded its threshold on the last three days of last week while the NASDAQ has been more positive: This is split decision and I think the call could go to the Nas. We could go up TOR. I feel better already, hope you do. Islander . New lows NASDAQ NYSE Monday 22 22 Tuesday 32 36 Wednesday 47 48 Thursday 63 104 Friday 42 91 Courtsey of the Mike Burk weekly news letter (edited out errors)

[Tor]

Fair enough. Just putting my view. FWIW I see it being too early to call a v spike up, and personally would rather see some consolidation action before we go up again. I may be worng and regularly am. Ideally i look for lower prices early in the week (lows holding) then up within this consolidation. Two things make me on "alert" to possible lower prices: oneis a break of earlier lows where I will short. Arent these long standing rules of thumb now redundant? I mean cos of the increase in new issuance and interest related instruments? I dont know, I just read it somewhere the was difficult to use previous rules to present day due tochanges in composition of indexes. All I can see on the horizon is a possible cut in interest rates before the summer as we have a small window of benign inflation in the US. I would ideally like to see higher stock prices on this view, then down again bigger correction, before the real strong run up before year end. We shall see!!

Edited by Tor, 09 June 2007 - 05:25 PM.

[Tor]

Islander, I must give the bull trend the benfit of the doubt for now. I posted before, this could be a wave 4 correction witgh 1578 as a target for the 5th, unless 1480 breaks. My comment was for next week: No Hindenberg warning signal (yet). New 52-week Lows in the US expanded to early-March levels yesterday, but the overall criteria for a warning signal were not met. You will see from the chart that, on the three occasions in the past two years when initial New Low readings exceeded 100, the market made at least new intra-day lows 1-5 weeks later. The chart also includes the 50- and 90-day moving averages. The former (where the index is now) should provide support, but the latter must hold if the market is to remain in its post-March uptrend. However, note that, since July 2005, 8-day RSI readings at Thursday’s level were followed by lower index lows eventually (if only temporarily in October 2005, but the correction had been running longer). S&P right at a critical level. For the most bullish wave count to remain intact, the S&P should bottom at 1,490.27 (38% retracement of the 3rd wave). So, if 1,485 gives way decisively, it will begin to look as if the targets around 1,430 were the correct focus, and we were wrong to rely on the weekly close above 1,530. Once 1,485 goes, the next target will become 1,418 (38% retracement of the post-June 2006 rally). That is also the area where a 200-day moving average buy signal will occur, if bullish divergence has formed in the momentum and breadth indicators by then.

Edited by Tor, 09 June 2007 - 06:09 PM.

[Islander]

Thank you, I believe I understand. Best, Islander.