Rally rejected?

With the Dow Transports today failing the 50-day I now expect that the rally has failed.
The Transports you might remember is the index I chose as the leading index because it made new 52-week highs in advance of other indices. The transports is a narrow index but significant in that it is sensitive to the economy. The transports index had a short term flirt with new highs and now appears to be rejecting a market breakout to new highs. In my view this points to the market going lower from here. With the late-stage nature of market leaders this outcome should be no surprise but still we wait for confirmation. I expect the other indices to now fail the 50-day.

The market can go anywhere it wants and when it wants but today it wants to go down. The decline is so far on light volume. There a quite a few stocks moving up on volume today: TZOO is breaking out. Pocket pivots may be forming on: WLT, TZOO, AAPL, SSRI, DECK, CHKP, HAL, NOG, WYNN, CLF, BHI, EW.

The strength in these stocks is interesting. We are not it seems in a market liquidation phase of a downturn. It is clear that investors don't agree on the near term direction of the maket. So we may continue the sideways motion that the market has been in since the beginning of the year.

Hello Mike,
While the transports seem to be hanging by a thread, I note many former leading stocks that you have referred to seem to have already chosen the low road scenario. APKT, ARUN, RVBD.

jmbarnette

I agree with your comments. When we look at Jerry's leader index of 22 stocks six are trading below their 50-day moving average: ARUN, OPNT, ALTR, INFA, CTSH and OPEN.

BTU is trading below its 200-day moving average.

FTNT and RVBD were leading stocks (not part of Jerry's index) and had massive gap downs today.

In times like the current choppy market if my portfolio is gaining headway I continue to add positions. My portfolio is not making any headway so I will sit on my hands until the market resolves itself. Sideways choppy markets are death to intermediate term players.

[QUOTE=mscott;14909] Sideways choppy markets are death to intermediate term players.[/QUOTE]

Completely agree. There is no trend, and if we start one from here, then we're only on day 2 (at best). Plenty of time to sit back and see how the markets develop.

I have several intermediate timers that are giving weak signals. The Elder FI timer did move long with yesterday's action; this timer also whipsawed over the past two weeks. My 5d-65d timer on my "quality" GGT index is on the fringes of being long/short, but my Contra 3x ETF 5d-65d timer has moved LONG (barely).

Hardly a decisive market.

In case you hadn't seen:

[url]http://www.marketwatch.com/story/transports-weakness-as-a-leading-indicator-2011-07-22?link=home_carousel[/url]

Hi, Mike.

You're the DJT maven. Is it significant in the slightest that the IBD charts have the RS as actually rising and that it closed today in the blue... yes, blue, altho price must have been infinitesimally close to yesterday's.... what part do this morning's numbers play?

It looks like on 6/13 the DJT led by one or two days, so would that be possible here?

We are so oversold, and it looks like only about 10% of Pascal's universe is in short wait mode, so gotta wonder.

Tnx in advance.

Okay, scratch that post altogether.

I checked the DJT again, also with IBD, and it's showing a much lower close. I think I was looking at the DJ Transportation Option index instead. Sorry.

[QUOTE=ilonaross;17244]Hi, Mike.

You're the DJT maven. Is it significant in the slightest that the IBD charts have the RS as actually rising and that it closed today in the blue... yes, blue, altho price must have been infinitesimally close to yesterday's.... what part do this morning's numbers play?

It looks like on 6/13 the DJT led by one or two days, so would that be possible here?

We are so oversold, and it looks like only about 10% of Pascal's universe is in short wait mode, so gotta wonder.

Tnx in advance.[/QUOTE]

Ilona,


After a short signal has been issued, it is the number of sectors waiting for a long signal that will tell you how oversold the market is. Under that measure, we need to reach 50% to be really oversold.

Pascal

Tnx for the clarification.