Quiet Friday Helped Maintain Indices Breakouts

 

Speaking of the Russell 2000, it edged a breakout but it has a long way to go before it can challenge its 200-day MA. The index is struggling a little in relative performance (ahead of Large Cap but behind Tech indices) but it's not without bullish momentum.

 

Of other charts, the relative relationship between the Dow Transports and Dow Indices is rebounding off resistance defined by the last swing low; this is a relationship is in a multi-year decline and is Dow Theory -ve, reflecting underlying weakness in the economy (an aspect not reflected in either consumer sentiment and unemployment figures).

 

Speaking of... consumer sentiment has only started to roll over, but unemployment has yet to break.

 

The chart of 52-week new NYSE highs and lows, had the largest spike in new lows over the last 10 years which suggests the recent swing low is of substance.

 

The Percentage of Nasdaq Stock above the 200-day MA also came close to tagging a line which has marked the major lows of 2002, 2009, and 2011. Another tick in the column to suggest that the December low is a major low.

 

What all these charts together suggest is that the current bounce has further upside to come, but it may only turn out to be a bear rally which means the next down leg could retrace most of this gain. Investors should be excited if this happens; the early investor 'buy' trigger from November has seen the market rally to a frequency of one-buy-a-month over a 12- to 18-month accumulation period. I'll let you know when you can accelerate this accumulation, but for now, buy small and spread your investment over time. If you missed the December deep value buying opportunity, other chances will present themselves. 

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