Mike
12-09-2011, 10:08 AM
The battle at the 200-day moving average seems to be continuing. The NASDAQ and S&P500 have made three attempts to move above the 200-day and has so far failed. Third attempts often work if the index is going to succeed. I take the current failure as evidence of a possible failed rally attempts. I am short BIDU since its failure of the 50-day.
Yesterday's action produced two sell signals on the Market School Model. An S5 close below the 21-day and an S9 close below the 50-day. This wipes out any buy signals that we had in our pocket to be used on a future follow-through day. We also had a distribution day on the NASDAQ yesterday. Market internals were decidedly negative yesterday also. The rally count is 9 days now and we still await a follow through on one of the following indices: NASDAQ, NYSE Composite or S&P500. As I write (30-minutes into the trading day) the NYSE Composite is currently up 1.3% on a volume trajectory higher than yesterday. If this continues we could see a FTD today. Much too early to tell.
My main worry is a fake out. A FTD running up to or slightly above the 200-day sucking everyone in followed by a decicive break to the down side. I would call this the maximum pain scenario. The market seems to like to dish out this kind of pain.
Yesterday's action produced two sell signals on the Market School Model. An S5 close below the 21-day and an S9 close below the 50-day. This wipes out any buy signals that we had in our pocket to be used on a future follow-through day. We also had a distribution day on the NASDAQ yesterday. Market internals were decidedly negative yesterday also. The rally count is 9 days now and we still await a follow through on one of the following indices: NASDAQ, NYSE Composite or S&P500. As I write (30-minutes into the trading day) the NYSE Composite is currently up 1.3% on a volume trajectory higher than yesterday. If this continues we could see a FTD today. Much too early to tell.
My main worry is a fake out. A FTD running up to or slightly above the 200-day sucking everyone in followed by a decicive break to the down side. I would call this the maximum pain scenario. The market seems to like to dish out this kind of pain.