Overheating Economy And Inflation

The Short-Term Trend

A new short-term uptrend started this past Tuesday, March 9, as shown by the white candle below, and I have re-deployed my cash back into the market. 

The time for me to get aggressive is when the PMO is at the bottom of the range and starting to move higher, such as what was seen this past week. I was a little more aggressive than usual about re-deploying my cash because I have a feeling that this is going to be a brief uptrend. Like everyone else, I'm worried that yields will spike again. Also, I completely avoided any technology stocks and focused entirely on financials, materials, energy, and industrials.

There is another problem, however, which I will discuss below after browsing the basic charts I use to show the short-term trend.

The new uptrend was confirmed by a turn upwards in the SPX Summation Index.

On Monday, the number of new lows dropped down dramatically, indicating that the selling pressure was gone and that the market could start to trend higher again.

On Monday, the bullish percents started to trend higher again, which also added confirmation to the new uptrend.

Finally, the 10-day Call / Put turned higher on Friday, although it was a late confirmation. 

That's a lot of confirmation for a new uptrend. So, what's the problem?

The only problem with this uptrend is that the NAZ-100 is still under its 20-day average where it is finding resistance, and the market probably can't advance too far or for too long without NDX participation. The chart below looks suspiciously like a setup for a short sale. 

I'm thinking that the Nasdaq is completely under the control of the 10-year yield. If the yield goes down, the Nasdaq will head higher and it will easily blast through any of the short-term resistance. On the other hand, if the yield goes up, then the Nasdaq goes down -- the only question is how far down?

1 2 3
View single page >> |

Disclaimer: I am not a registered investment adviser. My comments reflect my view of the market, and what I am doing with my accounts. The analysis is not a recommendation to buy, sell, ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.