Saturday, February 20, 2010

Weekly Market Commentary: Low Volume Gains

This week was more about the developing bottom in the various market internals than it was about the indices themselves. The S&P is no longer overbought but has a long way to go before it turns oversold.


It was the same story for the Nasdaq


The Nasdaq Bullish Percents finally dropped to oversold levels but the pattern has the look of a measured move - a drop to the rising support (green) line looks a good bet for a decent bottom.


The Nasdaq Percent of Stocks above the 50-day MA completed the first part a bottom with the uptick in stochastics - the MACD trigger 'buy' is next


The Nasdaq Summation Index also saw stochastics drop into oversold territory, but the internal itself is in neutral territory.


The S&P Bullish Percent was the odd one out as it is not oversold and the internal has only dropped out of overbought conditions.


Action in the markets and market internals are showing similarities to the early part of 2007, just before markets made their final highs in August - suggesting the current decline is a pullback in the March 2009 advance. There is a good chance market highs will be taken out with only minor pullbacks to tease bears; but anything which gets back to lows suggests a measured move down from whatever high is posted from this rally.


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