The 10 day high – low indicator runs through all the issues in the Russell 2000 and SP500 counting the number of stocks hitting a new 10 day high and subtracting from the count the number of stocks hitting a new 10 day low.
The indictor for Monday shows a downward bias to the –50% level but historically a bounce after market shenanigans like OPEX is possible.
The 40 DMA % Index runs through all the NYSE stocks and counts the number of issues that are trading above their 40 day moving average.
An indicator crossing below the 20 day moving average of the indicator has been a sell signal. A filter of 2 days applied makes a confirmation. We are sitting one day below on both the NYSE and the RUT.
Our Zweig has failed to make it into overbought and indicates as it has in the past during this run that this thrust is over as far a making new highs. I expect a return at least to the red line area before the markets mount another push for the top.
We could get a last attempt over the next couple of days up to 1105 ES which should be cautioned as a bull trap. Like the green circled area during the end of October.
On Friday, the NYSE 52 Week New Highs remained weak indicating more downside potential.
To turn the indicator around on Monday we would need 338 New Highs. Only a strong gap opening would get us there. Watch the futures tonight.
This posting is more of a rant then anything. Here it comes. I hate posts that contain feeling words when it comes to market information. We have all read them:
You get the message. In fact this post itself is a feely post. It start off with “I hate…”
To become better traders we need to put aside our feelings and concentrate on facts. Is the market oversold? Is it toppy? How do you measure toppiness? What is toppiness?
When you get posts or newsletters or read blogs that have these “code” words in it, you need to read it as the author does not know nor does he/she have an answer. Unless you have quantified the “gut” success of the author ignore the feelings. Strike them from the record. Too often we go looking for confirmation on our “feelings” and we find market empathy. We must approach the markets with feeling neutrality and trade the quantifiable information we can extract.
I too often use these soft words too in my postings but I pledge to become better. You will notice as you start to read more and more newsletters who are the emotional traders and who trade on information. Learn to decode and you can start to find the best information out there.
RedlionTrader
