Jako - Great cranker to start the Weekend. Recently, weekends on the XJO have been a place for thoughtful reflection on the state of the market. Insight and intelligence - hard to beat.
Comment: Another solid day up on most indices. SP500 was a high volume, relatively narrow range day – that’s what we expect on OpEx Day. The Dow Industrials continues to lag. I’ve often expressed concern about unbalanced sets of indices. (This is the basic concept underlying the centuries old Dow Theory.) The imbalance will be resolved one way or the other.
In Europe.
French CAC: +1.09% German DAX: +0.6% London FTSE: +0.71% Italy MIB: +0.38%
New York Stock Exchange NewHighs/NewLows. 472/23. Ratio: 95.4%. NL400 was 1 August, after which the SP500 declined nearly 5%. The time before that was in May when we saw four days in a row when NewHighs >400 occurred on four consecutive days. SP500 then fell about 6%. This doesn’t mean it will happen again, but the current figure suggests that the market is in the grips of a mania which usually doesn’t end well. If the market does turn down, it is likely to be significant.
Technical Comment on the SP500 (closed at 1744.5)
Indicators:
MACD Histogram: Above zero. Positive MACD: Above zero. Positive. RSI.9 is at 70.6. Overbought. Stochastic. 99.5. Extreme Overbought. (It can’t go higher than 100.) CCI.14: +179.5. Overbought Money Flow: 61.6. Positive. Possible negative divergence.
RSI, CCI and Stochastic are both now overbought, with the Stochastic at an extreme level. There’s a major divergence on the MFI – I take serious note of such divergences on the MFI. Time can work off these divergences, but if the market turns down it’s likely to be a significant pull back. That’s the second time today I’ve used the “s” word. Something “significant” must be going on. :)
The SP500 is now up to the oblique restraining line drawn across the highs of May, August and September. The Index is at resistance and overbought – to me, this looks like a good place for a top. We’ll see. In the meantime – the trend is up.
(20min delay)