There could be a stealth correction going on with the DOW. It closed below its 20 DMA and a big hitter component, IBM, faltered at a key multi-year resistance resistance level. When IBM drags the DOW down, you need to pay attention. Today marks the first day since August that this big tech closes below its 50 DMA. None of this has been happening with any serious downside volume, so it remains questionable. Nevertheless, should the DOW not hold its 30 DMA next week (now at 12617), bulls will need to play defense.
Yesterday's COMP doji/spinning top resolved to the downside. If this confirms another day, we could have seen the highs for now. I still remain troubled by the longer term relative weakness of both NDX and OEX, top 100 COMP and top 100 S&P respectively (NDX did do a minor new high, but it still lags the COMP which did close above it's earlier high, NDX did not). The complete failure of OEX to overcome 670 (61.8% 2000/2002) after repeated attempts this month, must be sounding some alarm bells amongst old-timers. I felt a few days ago that this market would turn bearish if NYSE fails at 9455 and OEX at 670 and that seems to be panning out, albeit in a very steady non-panicky style. Until these markers get taken out, my bias is neutral to bearish. Corrections don't need to start with a big bang. They can be multiple minor distribution days that eventually snowball.
Bulls still have high equity put to call ratios to support them, so the jury is still out (ISEE closed at 101, growing bearish sentiment, CBPE equity put/call at .74, same thing). But they need a catalyst and soon. I for one can't wait for a higher VIX trading range. This stuff is for the birds.
In summary, bulls need to heed the warning signs and bears need to watch their step as they seem to have plenty of company and short covering rallies can pack a punch. The wonderful thing about daytrading futures is that you don't really care either way, but again, we could use more range.
Yesterday's COMP doji/spinning top resolved to the downside. If this confirms another day, we could have seen the highs for now. I still remain troubled by the longer term relative weakness of both NDX and OEX, top 100 COMP and top 100 S&P respectively (NDX did do a minor new high, but it still lags the COMP which did close above it's earlier high, NDX did not). The complete failure of OEX to overcome 670 (61.8% 2000/2002) after repeated attempts this month, must be sounding some alarm bells amongst old-timers. I felt a few days ago that this market would turn bearish if NYSE fails at 9455 and OEX at 670 and that seems to be panning out, albeit in a very steady non-panicky style. Until these markers get taken out, my bias is neutral to bearish. Corrections don't need to start with a big bang. They can be multiple minor distribution days that eventually snowball.
Bulls still have high equity put to call ratios to support them, so the jury is still out (ISEE closed at 101, growing bearish sentiment, CBPE equity put/call at .74, same thing). But they need a catalyst and soon. I for one can't wait for a higher VIX trading range. This stuff is for the birds.
In summary, bulls need to heed the warning signs and bears need to watch their step as they seem to have plenty of company and short covering rallies can pack a punch. The wonderful thing about daytrading futures is that you don't really care either way, but again, we could use more range.
This entry was posted
on Friday, February 23, 2007 at 2/23/2007 09:10:00 PM.
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