BiggDaddy - brilliant as always - and, as always, suitably diffident about your own efforts in the market. :)
In America:
Dow Industrials -0.25% Dow Transports -2% SP500 -0.29% Russell 2000 -2.01% Nasdaq100 -0.28% Comment: A modest down down on the three big indices – Dow 30, SP500 and Nasdaq100. Volume is rising. The high beta indices, Dow Transports and R2K, both carked it. Not a good sign.
The Bernank promised nothing after the Fed met. The market was up modestly until that stage then said “We don’t like it”. Hence the long upper tail on today’s candle indicating selling. But the final result wasn’t too bad.
NewHighs/NewLows 221/42 NH>NL. The ratio of NH/(NH+NL) is at 84%. In the Do Not Sell Zone. New Lows are creeping up into the nervous zone.
Technical Comment on the Dow 30:
The Dow finished at 12976.1. Support from the 19 July high is 12977.6. That’s close enough. (But I think the Olympic judges would call that a Magnussen Silver Medal.) Indicators: MACD Histogram. Marginally above zero. Neutral. MACD. Above zero. Positive. RSI.9 is at 58.6. Positive, but dipping. Stochastic. 82.4. Overbought. CCI.14: +82.3. Dipping below +100, negative.
The 10-DayEMA (blue dotted line) is above the 20-DayEMA (red dotted line). Positive.
The medium term trend is up. The short term trend as measured by the 5-Day EMA is up. That’s now three days down without a break of the 5-Day EMA – I think we still have to count this as consolidation at the highs. But I’m getting nervous.
Here’s the thing that worries me. The DIA/ IWM Ratio. The DIA is the tracking ETF for the Dow Jones (big caps) while the IWM is the tracking ETF for the R2K (small caps). The Upper Panel is the chart of the DIA. The lower panel is the ratio of DIA to IWM. Up means that the Large Caps are outperforming the Small Caps which signifies a defensive posture by market participants. That’s been the case since early July. There’s not a lot of confidence in the last two upthrusts in the charts.
This is what we expect to see before a major sell-off in the market.
At this stage, with a gentle pull-back, the market seems to be in "wait" mode - waiting on some profound action out of the Thursday meeting of the ECB. "Super Mario" (Mario Draghi, the head of the ECB) promised last Thursday to do "whatever it takes" - and the markets had a testosterone surge. Now it seems to be waiting on some tangible action to follow up on the words.
Then, of course, we get the Jobs Report out of America on Friday.
A couple of poor market reactions to those upcoming events could see the market fall heavily. That's what the DIA/IWM Ratio seems to be pricing in.
On the other hand, the market has had a rest for three days. Enough time to gather ammunition for another push higher.
Even oh-hum events out of Europe and America would, I think, cause the market to sell off. That's what is being set up. So the next couple of announcements out of Europe and America had better be good, otherwise it will be the bears (in Olympic parlance) who will be medalling (meddling?).
(20min delay)