Silly me. Last night when I mentioned that today's economic reports could move the market I neglected to mention that moves in the dollar could do the same. But that almost goes without saying these days. Of late, the currency market has been the dog wagging its stock market tail. So even though I'd love to be an all-out bear after today I can't get too excited because the dollar could get weak again at any moment and re-ignite the stock buying party.
Having said that, the technicals are starting to look worrisome again. The S&P and Nasdaq are looking like Monday's rally was a false breakout and the Russell is once again under its 50-day moving average. It looks to me like the Nasdaq has formed an island top this week as well as breaking its November uptrend. Dell, which reported worse than expected earnings this evening, may weigh the Nasdaq down even more tomorrow.
The S&P 500's chart looks a little better than the Nasdaq chart. It's still within spitting distance of that nice round number of 1100. So the expiration pin is still very possible there.
The small caps are still lagging. The index touched or crossed its 50-day moving average on 6 of the previous 7 sessions. Today's gap below the 50 DMA on increasing volume really puts this latest leg up in question.
A few downgrades today
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Down(-) |
| Short-term | Down(-) | Lat(-) | Down(-) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
The Nasdaq is making a classic reverse point wave configuration. When the Qs lose that 40 1/2 area, this market is gonna have one butt ugly chart and we'll see at least a 20% total drop from the recent top.
Next week should be miraculously sanguine as the light volume holiday week puts said butt ugly chart in remission until precisely a week from Monday.
Rinse and repeat through 1/4/10 A.M.
What is a reverse point wave configuration?
Well I agree in that the market seasonally usually go up through holidays. What I really want to see is the impact of black friday sales. Overall, I bet that the market will get a token bounce that stalls and confirms the top by turning back down. If the Qs drop to about mid 40s, I think it will bounce there making a neckline of a major heads and shoulders top.
Chart of Charts 112109 -- Slam Down Bearish
5 and 20 day moving average crossovers say bearish. The market has had it's way with the 10 day for months, so it's bullish call is questionable.
Puts are going to get incredibly expensive soon....if you want them, get them now.
Black Swans do not drift in, they are delivered by a cruise missile in the middle of the night or on the weekend.
You cannot "Conquer the Crash" in a weekend, you need to be planning and acting for months. If you haven't started it may be too late, but still--- START!
And the puts are cheap as hell- bought some on Wednesday for next to nothing.
As per Michael, Dow Theory in progress. DJT already confirmed this market is going down hard soon and I can see that Black Swan coming from a mile away baby.