Market -> Decision Point
On February 19, 2011 ( posted 20 Feb ) I pointed out that we will see weakness ahead in Nasdaq Composite. Well, the weakness started Monday, 22nd February on Globex Futures and continued on Tuesday during market hours.
Hereunder, I will describe several sectors and my opinion.
Nasdaq Composite
The daily chart does not look good and has created a tiny sell signal. It would take the Nasdaq to rally immediately or the picture will get worst.
The Nasdaq 60 minute chart looks oversold enough to bounce. Last time Nasdaq dropped below the one month EMA it started to rally. So we need to be aware of that.
(chart courtesy of stockcharts.com)
NYSE Tick
Dropped below the zero line and a level not seen of late. There was some serious selling going on. The chart suggests we are in oversold territory and suggests this decline of yesterday should be taken a bit more seriously compared to others in past weeks.
(chart courtesy of stockcharts.com)
Market Breadth
Summation Index has turn down but not given a sell signal yet. Advance-Decline and Up-/ Down Volume has turned down as well.
(chart courtesy of stockcharts.com)
Dow Theory
Transport and Utility are sitting right on 50 EMA and need to be held or else we see some more selling in the market.
(chart courtesy of stockcharts.com)
Stock/Bond Ratio
As pointed out in my earlier article, the ratio should fall to 1.40 and we are on the way. Also pointed out that Bonds will rise and they did. It does suggest we see some capital shifting from equities back to bonds.
(charts courtesy of stockcharts.com)
VIX
Looks like the VIX has created a buy signal and signals further weakness ahead for the markets.
(chart courtesy of stockcharts.com)
US Oil Fund
Mentioned it in my last article that USO has a buy signal and here we are. Nice move up and looks bullish to me
(chart courtesy of stock charts)
HUI – American Gold Bugs
Shows still an uptrend but stochastic and red candle in daily looks not encouraging. Caution for my positions bought on 27 Jan 2011 is warranted. Have sold few stocks at yesterdays open and took partial profit. I also entered few PM stocks with buy signal. Again, caution is warranted as PM stocks do fall with SPX.
(chart courtesy of stockcharts.com)
GLD
Gold is still in an uptrend and should not break 134 or 132 level. This would turn the current uptrend. So stay alert and keep longs until the signal says otherwise.
(chart courtesy of stockcharts.com)
SLV
Silver reached my target 33-35 USD and I am still very cautions as monthly chart is telling us that a steep correction is ahead of us. Every spike above the monthly trend line ended with a large correction. A break of 30 USD would signal the correction has started. So use your stops wisely. The monthly chart suggests a target of 22-24 USD
(chart courtesy of stockcharts.com)
SUMMARY:
Overall the indicators do not look positive and caution is warranted for bulls. A break of pivot 1303 and 1291 will confirm the change in trend.
We need to respect the trend and do not fight is. Bull or Bears
Bulls need to act quick and bring SPX above 1330 to continue the uptrend.
Gold -> bullish as long as GLD is trading above 132-134 USD
Silver -> bullish as long as Silver is trading above 30 USD
HUI -> bullish
Copper-> Mentioned earlier that Copper is a short and we reached the 50dma.Lately Copper bounced back up from that level and it will be interesting to see if it will. Copper usually loses double of a decline in SPX .
Short term Copper is oversold.
VIX -> after forming a base at 16, VIX jumped 26% and closed at 20.80. Chart suggests a buy signal
Bonds -> moved up as expected and pointed out in earlier articles.
USO - > created a buy signal
NGas -> Neutral
USD -> bounced to 50dma and dropped a bit. - Neutral
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