I am switching to a BOT long signal this AM at 1298 on the sp500. It appears we are about to ascend through 1300 which is a key level for the market and which could provide as a catalyst for more upward momentum.
I had written quite some time ago that sometimes during momentum markets we see the market indices move the relative strength index into the power zone above 70 and then RESET itself by moving the RSI back down to the 70 level. This appears to be exactly what is going on right now as the market works off overbought levels with minor consolidations. This seems characteristic of parabolic trading environment and true momentum. Again, a very dangerous environment to be short.
So long again for now as we head into the end of January. Indicentally the end of January will be another important close for the market as we will get the month end closing candlestick. If January ends up be a Marubozu candlestick it could be very telling indeed.
It seems to me that going long here is very dangerous. There are actually more technical indicators pointing down than up, albeit that may simply mean a temporary correction.
To think that an RSI over 70 could indicate a power push above 70 seems a little like wishful thinking.
Usually RSIs over 70 simply means overbought, a technical for a correction.
But of more concern is how almost all the markets are within the resistance zone.
For example the Wilshire 5000, is at the top of its upward channel and at a 62% retracement from its August low.
My point: many technicals point for at least a modest to substantial correction. Most indexes are bumping against their resistance levels. Of course the market may go through the resistance but if so that will indicate a more prolonged upside and plenty of opportunity to make money on the upside. However if you are long here the risk reward is not in your favor. There is always time to get back into the markets if they power through BUT being long and risk a sharp correction does not seem prudent.
Most prudent is to pull out and wait! Less prudent with maximum short term reward is to go short. Least prudent is to go long.
Thus speaks Zarathustra.
I agree it is far from an ideal point to be going long, but I just think we are trading into a parabolic momentum type market. As far as DJIA it seems like another 500 upside points is potentially in play.
I was looking for a downward reaction near the 1300 but we never got it.. we may still get it but so far has not happened, so with that logic long still seems the way to go.
I just do not see enough signs yet that we are in for a 5% to 10% correction.
I have mentioned the incredibly accurate prognostications of the following website:
http://pugsma.wordpress.com/
His commentary was available to non-subscribers at end of Wed 26- Jan. It is worth a look. By almost any measure he thinks we are at or very near the top. But the downside may be only 5 to 10%.
I am very curious to see if the Aall Index will continue to swoon a bit or if it rebounded with the voting today and disclosed tomorrow morning. The break above 12,000 hopefully got the animal spirits excited.
I think the most unlikely event is a sudden sharp sell-off. Perhaps precipitated by some event, e.g. something in Middle East (Egypt, Lebanon) or Europe. I am a bear so I am speaking “my book”
Seems unbelievable but Aall Investor Sentiment Index for week ending 1.26.1011 ended with Bullish sentiment falling to 42% from 52% and Bearish rising from 29% to 34%. This is first week in maybe last 2 months that bullish is less than 50%. This weeks reading would make me think, unbelievably, that any correction would perhaps be shallower or perhaps of shorter duration. Only one week reading, but. . .
It could be that we will see a very hard downward move as we get into this 1300 range right now in the sp500. But at least as of right now it is not happening. And if it does not happen pretty soon I don’t see how we can get this 5 or 10% down…
Bears have a good chance at slamming the market down near this 1300 supply range, but if they don’t take advantage of it soon then maybe lost opportunity.
this market is coiled like a spring. i believe today (Thursday) was an inside day with very narrow range from high to low (only 52 dow points) – – maybe this spring action will propel it over 1300 resistance! some of the techs are acting very heady – – netflx, oracle, apple, and even msft is acting well – – –
I think we hit the top as of today. We should see VERY hard down on Monday of next week.
For the sake of us “bears” i hope your comment is more than wishful thinking
i hope i am very wrong . . . . but i now consider your postings almost as contrary indicators. . . . . but as a bear, i hope for once i hope your prognostication of “VERY had down on Monday” is correct! i truly truly hope that is the case.
i dont see a bad down Monday anymore given the drop we has this past Friday. i am looking for a 1 to 3 day upwards reaction rally early this week.