Last week we were a little concerned about the Dow showing signs that the uptrend had run out of gas and a reversal was emanate. Like I pointed out, the other 3 markets were not in agreement and it looks like the other three were right again. S&P500 up 42.59 points or 3.6%. Nasdaq up 71.57 points or 2.9%. Small Cap up 24.67 points or 4%. Finally, the Dow was up 325.59 points or 2.9%. So we follow the major markets and just be aware that the Dow is there and could give an early sign, but by itself, it means nothing.
The S&P 500 is breaking through the last Resistance line that I have on my charts for the year. We closed at 1223.61 and my last line was at 1219.80. Next week we need to hold above this line and separate from it. There will be pressure from both bulls and bears to see whose going to win this battle, but if we clear it by 5 or more points, this boy could really roll. Why? There is always a section of the market that is Shorting the market betting that the market will go south. If they are wrong, they have to buy back their position, or cover, which in turns forces the market up higher.
Let's take a look at the Weekly on the left above and what you see is showing that we are breaking through high’s of the year and the last line of resistance. We are above the 30 week ma and maybe just a bit to high above it. Sometimes when you have this much separation the market will slow or fall until the 30 ma catches up. RSI is rising and the Advance Decline line looks awesome. The volume is normal and I would like to see more volume.
The Daily chart on the S&P500 on the right, I wanted to span out a bit to show you what warning signs looked like. Normally we get two or three red candles in a row. A candle is representing the entire trading range for the day. Along with that, the RSI will be falling and or crossing the 50 and the MACD is crossing over and falling. Look at where we are and compare it to the warnings, do you see any warnings? No! We even broke the downtrend line on the RSI and turned back up. The MACD also went positive. The only thing that I or you can say is this, we may be over bought and this trend has run for to long and must reverse. No argument here, but since I cannot predict the future and no one has a clue what is going to happen next, I will stay invested and let it run until price tells me otherwise.
The last thing I will leave you with is the picture of the Dow 30 daily chart on the left to show you the failed break down. The warning signs were there, but there was no 8 day crossing over the 21 day, nor did the other three major indicators agree. So onward we go into next week with no warnings insight expect that we know that this trend is way overdue for a pullback or correction. The longer it goes, the harder or deeper the pullback will likely be.
TSP distribution: C-fund 35%, S-fund 35%, G-fund 30%
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