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Before I get started I wanted to say that I have never from a TA point of view
made any claims about any market top. So I am going to go out on a limb and say
we are at our top. Expecially if we have a sell off on Monday. But most
important is that this is how I/we learn. Be it right or wrong. On Monday if
the market has another bad day I am going to move our mutual funds to a money
market. We have modest gaines of 15% since last November & I am going to be
prudent.
Last time I gave a volume based analysis, plus market breadth etc on the DOW.
Below are my 4 things to check. I also look at my mutual funds which follow the
DOW & NASDAQ closely.
SO are these signs present at the moment?
1-Has the total volume of the NYSE peaked and broken the bottom of the uptrend
channel?
2-Has the total volume on the NYSE fallen below it's 50 day moving average,
staying below it for one week?
3- Does a 10 day MA of UP/Down Vol no longer move higher than a 50 day MA of
UP/Down Vol for a 2 week period of time?
4- Does the NEW High minus New Lows break below it's 50 day MA?
(from previous post)
Conclusion if the erosion in the DOW occurs it could happen as early as
tomorrow and as late as 1 to 1 1/2 months.
How much of a correction? Who knows. But the above would need to be confirmed
with the break down of the current uptrend channel of the DOW which is
currently ridding along the middle of the channel.
NEW COMMENTS:
I looked over these again early Sat Morn. Almost all of the 4 items are getting
closer to being true except total volume is still above the 50 day MA. SO I am
going to go out on a limb and say the market top is here. I am also going to
say that since the total volume has not broken its 50 day MA that this
correction might be slightly worse than the one we had in April.
But there are a few things that still stick in the back of my mind. A gent was
on Nightly Business Report in January showing a chart of the Dow based on
volume only. He showed the dow taking off like a rocket at the end of the year.
This guy has been correct more times than not.
All these mutuals funds pouring money into the market is another.
But I also see some very disturbing signs. The up/down vol ratio was .19 on
Friday. i.e., 19 sellers to 1 buyer. More disturbing yet, somewhere during the
1st half hour the up/down vol ratio was .04. That is 40 sellers to every
1 buyer. I haven't seen it that low and have not been able to discuss that with
a good friend of mine yet.
I also have an official sell signal on the Jarvis Factor & Pre-JF for
weekly data (don't ask-won't tell).
Well I am getting too tired need to go.
Harley Meyer
meyer093@xxxxxxxxxx
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