:: actio-et-reactio ::
amg's market charts and blather
Quite a turn-around on the NDX today. In fact, somewhat similar to the 9/21 day in price-action character. The late day rally was ostensibly the typical FOMC positioning (Greenspan left things unchanged).
What is curious is that a seemingly narrow trigger such as the WCOM "fraud" could generate such a wide-spread response, meaning I still find the action a bit "manufactured". Perhaps enough for a short-term bounce, but a revisit to lower lows is IMO more likely than not.
Also of interest is the Accum/Distribution line on the *SPX*, which shows little relative distribution relative to the 9/21 low, especially when compared to the NDX Accum/Distributuion whose low was clearly lower.
Tuesday night: Futures tanked BIG on WCOM $3.5B "fraud", sending the NDX (futures)to 978 (Oct98 "support" at 927) and the SPX to 952 as of this post.
The two indices are now in even closer price parity than before. At the futures values just stated, the NDX is now only 2.7% "higher" than the SPX. By comparison, at the peak in March 2000, the NDX was 209% higher, ie, twice the price. Wow. Things change.
As to where things are just now. These plunges, if they translate into the cash indices, move price right into the lower median lines, where no doubt there will be a buying frenzy at some point. Note how tomorrow is also the second day of the Fed meeting. Earlier today, One of the ex-Fed gov types was of the opinion that Greenspan would stay the course and NOT raise or lower rates. The strong plunge tonight will put even more tension into tomorrows announcement, regardless of its content.
As to the Small Caps, which have corrected a bit less vigorously, if this break holds, It will quite likely push the already tenuous "support" on the Small Caps lower. Again, creating a potential short lived rally moving into a wide trading range. All IMO.
One parting thought. I'd be wary of anticipating a "1987" type dead cat. If there is a "That's THE Bottom" type rally, it will IMO prove short lived.... but that's yet to come.
The early part of the week fulfilled the "bit more up" and that "taste of dust" is where we are today, the recent Up days having created yet another stranded island of longs.
Even today's close is just *too* technical (within .5 point of the Oct98 lows, yet another echo of markets past). Note too the increasing parity of the NDX and SPX (ie, they are both now in the 1000s and quite close in numerical value, even if the NDX is still by far the more volatile).
As mentioned before, niether the SPX nor the INDU have fully test those lows... not that they must, but again, there is a lack of closure, something left undone, about The Big Picture.
While there is little by way of recent support, I have added the Oct97 and Oct98 lows of 927 and 1063 as horizontal lines. I'll leave it to you to pull up the charts and examine each event on its own. There you will also find the "source" for the Sept gap (1126-1144).
As to the SML-- the bounce off the "green" fork was very wimpy and, again, I am not convinced of the strength of that bounce, so keep a tight reign on your positions. There was quite a bit of buying in the Mid/Small caps this week, that is relative to the Large Caps, but I continue less optimistic that the Small Caps will "save" this market at this juncture.
Today's dramatic plunge and reversal put in a low even lower than yesterdays lower low relative to September. Additionally, there are positive RSI/Accum-Dist divergences and a weekly chart slightly higher Wm%R.
All this gives the impression of a bit more up. Like many psychological goals, once again, one is still left with a taste of dust, a sort of lack of fulfillment, in terms of sentiment. It's just *too* technical, even with the SPX having joined the ranks of breaking its psychological 1000 barrier.
There may indeed be a rally, but I'm not convinced the NDX, or the market, is through with the lows. Note that niether the SPX nor the INDU have fully test those lows... not that they must, but again, there is a lack of closure, something left undone, about The Big Picture.
While there is little by way of recent support, I have added the Oct97 and Oct98 lows of 927 and 1063 as horizontal lines to the Daily chart. I'll leave it to you to pull up the charts and examine each event on its own. There you will also find the "source" for the Sept gap and May low (1126:1166 and 1142).
As to the SML-- it looks ready to have a bounce off the "green" fork. Again, I am not convinced of the strength of that bounce, so keep a tight reign on your positions.
Now what? The NDX put in an ever so slightly lower low relative to September, which to its credit was accompanied by a slightly *higher* RSI and as of today on the weekly chart, a slightly higher Wm%R.
Like many psychological goals, this one (testing prior significant lows) leaves a taste of dust, a sort of lack of fulfillment, in terms of sentiment. It's just *too* technical. It may produce a rally, but I'm not convinced the NDX, nor the market, is through with making lows. Note that niether the SPX nor the INDU test those lows... not that they must, but again, there is a lack of closure, something left undone, about The Big Picture.
Well, so INTC is the scape goat for this nasty move down. Ha. It will do for a day and for those like need a reason. For the memory banks, Nasdaq100 gapped down from 1160 to 1111.
OK, the cat barely bounced...and dropped like a rock. No support at the last low (1144) or even the chunk of gap from last September, making 1089 the next support, other than a quick tap of lower part of that last gap (1125) but that's likely to be the best of the bullishness while the big turgid move works itself into the larger market.
Yest, 6/6: The NDX is on its final leg to the test of the Sept lows, which have loomed largely as a sort of psychological "capitulation" mark. There may be a dead cat left in the NDX before another gust down.
Four SML observations stand out: (1) Clearly the previous trend is broken, but we've known that for some time. (2) The last pullback produced a lower low, which while not bad on its own, suggests more weakness than say the February pullback (3) The blue fork has been breached to the downside, but stopped by the black forks. This last point leads to (4), namely, that any rebounds may ultimately be stopped by the blue fork. In short, I'm far less optimistic that the Small Caps will "save" this market.
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
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