Some trend lines to watch early next week

Trend lines, price momentum and mkt internals suggest ST top is near. Another marginal higher high is possible but I expect the top will be printed before the end of the week.

Weekend update

Well , 2 things happened , but as usual with Mrs market it happened in an unexpected way, the ES1067,5 level we were expecting after the bounce occured today before any meaningful bounce (although we did have a 23 ES points bounce today , but it was smaller than expected).

Now, the path looks more complicated because market needs to retest higher levels before more downside , so it may need to backtest ES1112-4 level from ES1069 which is a long ways. Anyway, it seems the most probable scenario

We will post updates of FTSE setup tomorrow to follow it up since we still believe is a valid indication of what other international indices will do in the short term.


Some charts as promised:

Overall view (ES)




Close up, daily view (ES)



DJ Trans (daily)





Nasdaq (daily)


SOX daily


Russell 2000 daily



OK, now one important guy that DID NOT break its channel, and might well be a clue

DJ Industrials daily

Nasdaq and DJ Transportation Update

Nasdaq (previous analysis here)




DJT previous analysis here

Recap II - Major indices

We were pointing out some interesting levels for OEX and DJT last week. We can now check how did they do at the weekly close

DJT



OEX



SPX
Regarding SPX this was our view a couple weeks ago, main levels were succesfully tested this week. See chart below for an updated view.




About Nasdaq we were seeing a LT picture back in October which suggested a ST pop just to drop after. Main levels were tested and respected this week
NASDAQ

Nasdaq study

Monthly main trend lines with junction points


LT Fib study


Fib study close up view



ST view



NDX LT view

Thoughts for next week

I will post a more comprehensive review of what happened this week later. Meanwhile here are some thoughts about next week outlook.


VIX monthly



VIX weekly

NASDAQ 100

NASDAQ COMP

BULLISH PERCENT - NASDAQ

PPT for president!!

Hogs talk!!

Here are a set of the few stocks that are responsible of a majority of all NYSE volume. So we can think of them as market movers on most of the cases.
Just have a look at them and hear what these charts are saying....












RUSSELL 2000 review















NASDAQ review

Review I

Hi everybody,
Finally today I could make some spare time to review charts and do some postings. I hope you heard the message from the Market yesterday :), I believe it might have been the beginning of an interesting move.

Let's see some findings to clarify our play for next week:


Major market index facing thick resistance:

Major market index close up view:

NASDAQ Comp: broke trend line, with flat OBV and declining Mc Os.















Russell 2000 also presents a clear divergence just below a potential double top.

SOX more divergences at the potential IT top.

To bounce or not to bounce...

First of all, we see that the main (mid term) trend is still bearish which means that the strongest moves will be to the downside but we can see some signs of exhaustion and a probable bounce for the VST, after which we expect lower prices.

Here are the reasons that favors the possibility of a bounce

It is more clear at Nasdaq: We see how it found support at previous resistances + it made a hollow red candle ( increases possibilities of ST reversal) + divergence with OBV which is VST bullish. The "only" factor missing is a more pronounced reversal at the McOs which would reveal internals are also improving.




Anyway, regarding mkt internals we can see the following chart which do show more clues about a VST bounce:



At the ES we can also see how the price was contained by the orange lower channel and it respected the FIB retracement (red line) which is VST bullish.
Again, Mc Os is not yet confirming the bounce and this is the main reason not to be sure about it.



The main obstacle for the potential bounce is the 1026 area (previous resistance) which already stopped the bullish reaction on Friday. If taken out, then the path is cleared until 1039-45 area.



DJ Industrials also respected 2009 bullish trend line and important 38% Fib retracement


Similar picture at Major Market Index, 2009 trend line respected and previous resistance now became support.


Last but not least we had the confirmation of this mid term bearish trend at bonds as we were anticipating. TNX did make lower lows and lower highs in the last weeks and now it found support for the VST IMO.





P/C ratios are non conclusive but still showing quite high (fadable bearish sentiment) values

Exhaustion

As commented recently, it is very important to track market internals data to assess overall market strength/weakness at any given moment. However this data becomes even more important after sustained moves (up or down) since normally will anticipate the trend exhaustion before price confirms it.
Although traditional market internals still show the undeniable strength this bulls move have, some other indicators are already showing exhaustion. Last week, news helped to boost mini-rallies but they were unable to consolidate highs. I wouldn't be surprised if price finds a hard roof this week.

Hi- lo logic index



Zweig Breadth Thrust :



Absolute breath:
Both indicator and its RSI diverges from main indices (QQQQ shown here)

X-rays for Nasdaq

You might recall a previous post on the importance of market internals condition to assess overall indices strength.
Now I wanted to show you some stuff I have been observing during last days: the divergences among various market internals indicators and price have been increasing telling us this rally is going out of steam.
Divergences can last long but traders should never go against them as risk/reward ratio would be poor.
If we were doctors, our prognosis for NASDAQ (and for the rest of indices) will be reserved. I mean, there is no evident symptoms yet but the disease is well underway.

Our therapy: Mr. NASDAQ and Mr. SPX must have some rest (retracement), they need an important breather if their expectations of going higher still exist.