Friday,
As we have said before, Friday market activity is a good market sentiment reading as it shows how confident investors or traders are heading into the weekend… last Friday we had a +300 point rally in the DJIA and this Friday we close only up only 43 points with the NASDAQ closing down 1 point.
Is investor confidence deteriorating? I’m not even sure if there is any investor confidence left in this market, but I would say the rally in the NASDAQ is coming to a close and that is beginning to be reflected.
The DJIA advanced today but on very weak volume and with the candlestick formation still below yesterday’s high with some selling from the high this morning we have a weak continuation signal, very close to an inverted hammer. The MACD averages are still constricting and will in the future turn into the dreaded bearish crossover, and with the DJIA chart already breaking through the lower support back in June, we are looking for a continuation lower here, and analysis of the chart shows the past bounce from the July low to be finding resistance at the old support line broken in June… In short we have not yet bottomed.
The NASDAQ (my arch nemesis at the moment) lost 1 point today with a heavily overbought slow stochastic of 89.80 and an RSI reading now at 63.53; if the reading at 50 is fair valued and below 30 is oversold, the RSI at 63.53 is overbought, and as mentioned yesterday if it hits +70 I would sell the NASDAQ and not look back for some time to come. Technical resistance based on what the chart suggests the high could be based on the advance structure is 2,475.00 and today’s high and sell off point was 2,473.22 – either way you slice it, it’s time to take some profits off the table in anticipation of the pullback, or better yet turn those profits into short buying power and play the ride down.
Today’s MPT (Market Power Trend) Rating, which tells us what “Smart Money” is doing in the market and where support/resistance is came in at (01); this tells us yesterday’s base/support signal is weakening rather than being used as a buying opportunity – no big surprise there as “Smart Money” has been steadily selling the rally for some time now.
As Always; Be Smart, Be Patient, & You Will Be Successful.