Tuesday, November 07, 2006

Daily summary from Fallondpicks.com

I am slowly getting back up to speed, so please be patient. Junior arrived on Friday at 8 lbs 6 oz and is doing his best to keep us awake during the night!

Monday's gains helped relieve the series of losses markets have experienced over the last few days, but don't expect the big action to hit the markets until the election results are known. The relative lack of volume means the gains can only be considered weakly bullish (although Monday's trading did rank as a technical 'accumulation' day in all indices bar the S&P). There were bigger changes in supporting tech market internals [$NASI, $NAA50 and $BPCOMPQ]; breaks in the 5-day EMAs of the $NASI and $BPCOMPQ - aided by a bearish divergence in the $NAA50 (fewer stocks now support the rally); the break of the June-July bullish divergences of the ultimate oscillator of all three internals; similarly, strengthening of the bearish divergence in the MACDs, although a divergence has yet to develop in the $BPCOMPQ it has triggered a 'sell' signal. The $NAA50 attempted a bullish cross of its 5-day EMA, but the indicator is shaping a significant bearish divergence relative to its parent tech indices [NASDAQ and NASDAQ 100].

The earlier break of the rising channels in the tech [NASDAQ and NASDAQ 100] may turn out to be a 'bear' trap - but it will take a break of October highs to confirm. Large caps [Dow and S&P] bounced off channel support while small caps [Russell 2000] redefined channel support. Breaks of June-July bullish divergence of the MACDs were observed in the Dow and Russell 2000. While the Dow lost strength against the NASDAQ 100; the NASDAQ 100 and NASDAQ gained against small caps [Russell 2000]; and the S&P weakened against small caps [Russell 2000] - placing Tech as the leading market averages [Tech indices > Small caps > Large caps].

I am still bearish for the Ticker Sense Blogger Sentiment Poll (since September 23rd).


 
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