It was a pretty wild session of Friday. Early on, thanks to the jobs data, it looked like the strong-dollar-weak-stocks relationship was going to be broken. The Nasdaq and S&P quickly ran to to new 52-week highs but then sellers got busy and pushed both indices below Thursday's lows. That created rare back-to-back outside days on both indices. Back in August 2006 Dr. Brett did a post which lists some stats about these rare occurrences. As you'll see he shows that these double outside days tend to "lead to bullish outcomes". I'd be surprised if that was the case this time because this type of action right at resistance seems really toppy to me. Despite the S&P and Naz ending the day positive the day looks close to a blow-off top or a buying climax. I guess time will tell but in the meantime I'll still be focused on the S&P's trading range. It closed right in the middle of its range and I think it's due for a visit to the bottom of that range.
In an interesting turn of events, the Russell 2000 outperformed the larger cap indices. I'm going to keep an eye on the November high. If it can breakout that will remove one bearish thing from the technical landscape that's been bugging me for weeks.
Some upgrades today which bring us back to having ups across the board. This makes me want to be a little more bullish but right now the month of sideways action in the S&P weighs more in my thinking than this trend table.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Up | Up | Up(+) |
| Short-term | Up | Up(+) | Up(+) |
(+) 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.
You've quickly become one of my favorite blogs to read... you don't get caught up in the hype and I think your caution is warranted. It's easier to get in late, than to get out late. The latter hurts way more!
The eur/usd index is trading under that critical support I mentioned premarket. This could be interesting. The support is on the weekly chart so it could be a fall breakout still. Time will tell.
Thanks Doc. I try my best to steer clear of the hype.
Good analysis. This is my first time here. S&P highs have not been confirmed by most other markets like Kospi and Hang Seng. Also, market leaders like AAPL are losing steam. But dollar action usually says we go higher.
The euro/usd chart lost that 18 month trend line I mentioned in a previous post- the bull market is over for stock for a while. This could be the catalyst to confirm the reverse point wave top.