I wanted to show you something that I find interesting - when the market or any stock for that matter is trending it uses the 21-period EMA as its baseline. Here is the DIA for example.
You can see clearly how it dipped to touch the 21-EMA in the week of 09/05, and again in 09/16, once more in 10/30 and now again this past week. In this past week it actually closed below the 21-period EMA - once. For those who don't believe that the Dow 30 Industrial index isn't a good proxy for the stock market here is the SPY.
I'd say that without a label and a price bar you would have trouble telling one from the other. But what I find most interesting about Friday is the volume - we might be out of the Summer doldrums as far as volume is concerned. Once volume picks up can volatility be far behind?
Personally I believe we need another couple of blow off days which we might get next week after the 401K money comes in. Then a couple of normal weeks (trending up), followed by a rest the week after Christmas (low attendance in the pits) and then boom - January and full steam ahead into April.
But closer to hand we have Monday looming and the survey says --- the three sisters (DIA, SPY, QQQQ), the ugly step sister (IWM) and the proxy for the stock market of the 22nd century (GS) all finished with strong white candles in the final hour of trading. The up/down ratio is back to 34%(!) the new 20 day highs backed off to 533 and the new 20 day lows jumped ahead to 350. The VIX remains notably above its 10-day moving average but less than 10% - no matter - barring catastrophe I'm looking to an up day on Monday. This suggests that there are things to buy and a will to buy them.
The magic coin is 33 and 23 having missed Wednesday. It also took a vacation so for Monday, with a fresh outlook, it says ... tails - bear market. Well I guess if you keep calling the same thing you will eventually be correct.
Again the charts are from prophet.net an excellent charting service. You will note that I have no ads and so if you go there you go on your own. I receive nothing from the endorsement.
2 comments:
Would love your take on MSFT's chart if you have a minute. I wrote in my blog that I sold some because it looked like it might have topped. If it has topped does that mean anything for the NAS as a whole? I find the cross below the 20 day SMA to be troubling.
Great blog, by the way. It's one of my favorites.
Got your blog bookmarked too!
Bought some QQQQ puts in early November looking for a pull back of sorts. We'll see...
Gonna give Jim that MSFT oulook. Wondering too.
Stay in the money honey, and I shall too!
Jerry : )
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