Our new 52 week highs changed momentum a couple of days ago, and Friday’s strong thrust and a weak preceding 5 days make it highly probable that we will continue to rise higher on the 5day momentum indicator for the new highs. Today I share the Russell new highs
The force of Friday’s gap open can be seen on the New High. The middle indicator( blue, green, yellow) is the 5day moving average laid on top of our Magic Numbers which for today are –2 and 8. I doubt we will get –2 new highs today so our 5day is assured of rising higher and the chances of hitting above 8 are pretty assured also, so today the 5day will increase its value.
Our ten-day new hi-lo uses the entire stock list of the Russell 3000, so it includes large caps as well as the Russell 2000 small caps. This indicator shows how powerful that thrust out of this little bear trap was. Taking the Hi-Lo diff (the green line) back up to near the highs of the last bull leg. These thrusts have in the past lead to higher highs in the next few days. The pattern is to get a thrust like this and then decay momentum, but still making higher highs along the way. Both indicators are telling us that we will be making a new high this week unless a news trumping story arrives. I would say what we are learning from our indicators is Thrust- buy-buy-buy, as we decay to the 0 line on the new 10 day – hi-lo diff we should start to offload.
We will watch this week to see if we get this same thrust decay pattern follow through.
Zweig Panel
Our Zweig panel again shows the power of the thrust. This thrust was more powerful than the one that started the July-August rally. This indicator also has the habit of going overbought, staying and decaying and while prices make new highs along the way. We can at least see when the momentum is leaving the market and place appropriate hedges or money management.
Happy trading for the week..
-RLT
