Thursday, October 15, 2009

Stock Rally Losing Momentum



Notice on the 15min Nasdaq 100 chart that the sharpness of the rallies since the bottom has waned. Each rally has gone more and more sideways to where my red lines look like dominoes getting ready to fall over. And if you look at my previous post giving a wave count for the NDX, it shows the wave count as a completed 5 waves up right now. The market may gring higher, but clearly momentum is waning. Also notice that the internals are weakening as well as shown by my circled NYSE and Nasdaq indicators. Breadth and volume is negative, and after such great earnings and the big rally yesterday, it's showing that the optimism has faded quickly. This current rally is exhausting and should result in a pullback. I'm not sure what magnitude it will be, but since all the major indices, except the Russell 2000, have made new highs and appears to completed a 5 wave rise from the recent lows, it opens the door to the possibility for a wave 2 or B top.

We'll see. But right now it looks like momentum is severely waning and a pullback or at least a pause in the uptrend is occurring right now.

1 comment:

binve said...

Excellent post, couldn't agree more regarding the momentum story. My last to posts focus on breadth, momentum and channeling and I think fits in with your observations very well. http://marketthoughtsandanalysis.blogspot.com/2009/10/man-spx-your-breadth-stinks.html and http://marketthoughtsandanalysis.blogspot.com/2009/10/my-count-of-this-crazy-rally.html. Thanks for the post!

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