Monday, November 30, 2009
Market Divergences Remains the Key Theme
The embedded video is of technical analyst, Carter Worth, who makes routine appearances on CNBC. He was very good in projecting the meat of the October 2008 collapse so I tend to follow him to supplement the other bits of data I compile. Today he was on Fast Money talking about basically what I've been talking about recently in that higher risk markets are starting to break away from the bigger blue chip indices; and he illustrated this with Japan's Nikkei 225 index. It's worth watching because it's in line with what I've been pounding the table about the past few weeks, and it's always nice to see other reputable analysts who use different technicals and disciplines come up with similar findings and conclusions.
The market action today was fairly bullish in the sense that the market didn't selloff more, despite the strong short term technical evidence suggesting it would. But at the same time, the market didn't break the 1114 S&P level I've said was key either, and the money managers' buying spree on Mondays had little impact until the very end of the day, so the bearish case remains intact. The dollar bottom and rally still remains a possibility as seen with the lack of new highs in the AUD/USD and EUR/USD which move opposite to the US dollar. We can watch those pairs through the Asian and European sessions tonight to see if any big moves are on the horizon Tuesday (both pairs should move in the same direction as the stock market). It's possible that today's late day buying surge was the fund managers coming in and buying up stock; probably after they saw there wasn't going to be a meltdown today after the Dubai stuff fully sunk in after the holiday (click here to read the CNBC article regarding money managers buying up the market on Mondays the past several weeks).
As for the EWP count, the market has only fallen in 3 waves so far. So as of right now, it looks like a correction, but that can change with subdivisions lower in the coming days. Also, you can see how the market has formed a support shelf at the 1085 S&P cash level with the market making long candlestick wicks in that area. When the market breaks beneath that level strongly, and closely well beneath it, it should lead to acceleration of selling. So for now, we have to be patient and wait to see how the market unfolds in the near future here.
Not much of anything signficant really occurred today that's worth spending a lot of time on so I think I'll end it there and let the market action unfold so we can get a better idea of where it's headed in the coming weeks. Until then, I remain short term bearish as long as the S&P trades beneath 1114.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.