Wednesday, January 19, 2011
Brief Morning Update; Bears Can Start Nibbling
With the Nasdaqs being the higher risk of the major indices it's always important to watch what they're doing as part of the analysis process of the overall market. Yesterday and today the Nasdaqs have been weak, and the internals are the same. The strongest index which holds the bluist of the blue chip stocks is the Dow and it's fairing the best this week, suggesting people are moving out of risk and into "safety". This behavior often acts as a precursor to a selloff phase. Also, notice the amount of down volume relative to up volume on the NYSE as well. Some fear and profit taking is coming into play here, another bearish sign for the upcoming days/weeks. And when you take into account the high level of optimism, the overstretched rally, overbought momentum indicators, and the VIX sell signal that executed yesterday, it makes for a good setup for the bears on the short side here.
Another good piece of evidence for the bears is the 5 wave decline in the Nasdaq 100. The evidence is strong that a top may be in place and it's worth it for the bears to at least start nibbling here, in my opinion.
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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.