Monday, November 2, 2009

More Bearish Data



I also wanted to show you the very important daily ascending trendline I've been talking about. After some choppy action around it last week, the S&P held beneath the trendline convincingly today. The slope is so steep on the trendline that the longer it holds, the harder it will be for the bulls to regain. Also, if any rally attempt ensues this week, look for the trendline to cap any rallies on a closing basis. Tomorrow the trendline is at the 1061 S&P area.

Also, meandering through various markets and securities I wanted to note that market barometers Dow Utilities and Transports indices closed negative today (along with the recent market leader Russell 2000) with all of them also breaking below their October 2nd lows, along with the Nasdaqs, following the Russell 2000 which did so last week.

So as I implied earlier, the surface numbers on the markets look like a strong rally and bullish action today, but other than the positive close, I see all the underlying factors very bearish. The 5 wave dollar rally, flat NYSE internals, the VIX failing to call that "BULL SIGNAL", and weak key indices today warn of significant bearish underpinnings in the market right now.

6 comments:

NEO!@# said...

What are the chance of a repeat head and shoulders pattern failure like what we had in July which took us to new highs. thx neo

Todd S said...

The evidence is much stronger that a top is in this time on several fronts. Anything is possible, however the data strongly favors a top. I trade based on highly probable scenarios, there are no certainties. The top and crash scenario is highly probable.

Regards,
Todd

Anonymous said...

Hi,

It is not really clear on the Dow Jones that it is a five wave decline, because wave 4 enter the price territory of wave 1. NO!!!

and thank you for your posting.

Rached

Todd S said...

Hi Rached, thanks for pointing out the Dow's structure. The Dow is not declining impulsively, or in much of a distinguishable pattern yet. But the index is only 30 stocks with odd weighting to each stock. It's a strange index and not representative of "the crowd" that EWP is based on. So the S&P 500 is what I tend to track the most, and I use the Nasdaqs and Russell 2000 as prognosticators when possible. The DJ Wilshire 5000 is probably the best indicator of crowd psychology containing almost every stock on the market. However, I don't trade the index and almost no one does. So my "weapon of choice" is the S&P 500.

Regards,
Todd

Anonymous said...

Hi, I do agree with you regarding "the crowd" that EWP is based on. If I am not wrong, it is Prechter's index for counting waves, isn't?

and again thank you for your posting.

Rach

Todd S said...

Hi Rach,

Prechter uses the S&P a lot for current wave counts, but uses the Dow when illustrating long term 200+ year wave counts because its the only one with accurate data going back that far. I try to use the index that offers the best elliott wave picture, and I start by looking at the S&P, then Nasdaq 100, then the Composite, then the Russell 2000, then the DJ Wilshire 5000, then the Dow Industrials.

Todd

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