Saturday, 10 November 2012

Daily Index Cycle update

It was a very mixed day for the indexes. Opening declines soon reversed to moderate gains, and by 1pm the market was holding on to 1% gains. The market then rolled over, and the afternoon saw considerable weakness. The VIX managed to claw higher into the close, and thus confirmed this latest bout of index weakness.

Dow, daily




Lets start with the tranny, which was one of the weakest indexes. It closed the week above the big 5000 threshold, but this is now the third consecutive daily decline, and Monday certainly does not look bullish. Bears should be seeking a major break lower next week <4900.

The Dow and SP'500 both look weak, and despite closing a touch higher today, the near term trend looks downward.

The weekly and monthly charts both suggest an underlying weakness into year end, and this downward pressure should help to at least hit my near term target of sp'1345/40 next week.

If we do manage to hit sp'1345/40 before opex next Friday, I anticipate a very strong reversal, to at least 1400 in the subsequent 3-7 trading days.

A little more later...