I am having a hard time being motivated in writing today’s weekly update because I don’t really want to look at the data and charts because I know already they are mixed. Last week we put in a hard up week but it certainly didn’t feel like it to me. We were long going into the week and I was overly optimistic of a strong thrust catching the bears in a trap and propelling us up to new highs on all indices including the RUT. Instead we have stalled out and the RUT continues to lag behind while the Dow runs away. This is not a good divergence and later this week we will look at some research I am working on showing what predictive qualities there are to an SPX/RUT divergence.
Zweig:
Let’s take a quick look at the Zweig, it has rolled over and is most likely heading down.
52 Week New Highs:
The NYSE 52 week new highs chart has a 5 day moving average that is still increasing but barely. It would take a run away Monday to reset this indicator into a bull mode with new highs passing that bar pointed to by the yellow arrow (224 New Highs). In order to garnish that we would need a gap and run tomorrow morning. At 10am we would need to have over 80 new highs in our back pocket, that will be something to watch for on the Twitter feed and in the trading room.
% of Stock over their 40 DMA
This is the most encouraging indicator I have. The NYSE line is back above its 19 day moving average and moving in the correct direction. A good Monday should set this in the correct direction. The RUT like on all the other indicators has some more work to-do to get there.
My other indicators like the 10Day High Low indicators are all mixed. The RUT is on a sell signal while the SPX is on a buy/hold. I need one more day to consolidate the indicators. For that reason I have moved to cash until the day reveals its hand. It will take a Monday morning rally of a strong nature to pull the indicators back in line with a bull run. Any weakness or lackluster closing should push those indicators in the buy mode to the sell side.
Tomorrow we will watch the new highs, continue to monitor the RUT/SPX divergence and look for a turn around in the Zwieg. It should be a busy day. If you can join us in the room [ http://TTTHedge.acrobat.com/Traders] we will have the indicators up on the screen.
See you in the markets.
Marlin aka RedlionTrader.
