Sunday, April 18, 2010

Weekly Market Commentary: Shooting Star

Perhaps the first significant sign of a top in the weekly charts was the across the board bearish shooting stars. For the S&P the potential reversal occurred below resistance and will need a weekly close below the low of the pattern to confirm (1,186). Volume ranked as confirmed distribution with some of the heaviest selling last seen in the latter part of 2009 (although that selling didn't halt the advance).

($SPX)

via StockCharts.com


The shooting star for the Nasdaq bisected the first of two reaction high resistance levels from 2008. The index is getting sharply squeezed by the aforementioned resistance and the rising support from March 2009 lows

AAAA Nasdaq

via StockCharts.com


The weekly move for the Nasdaq 100 spanned the dual reaction highs of 2008

($NDX)

via StockCharts.com


The Percentage of Nasdaq Stocks above the 50-day MA was pegged by declining resistance and has been struggling to keep momentum.

($NAA50R)

via StockCharts.com


Nasdaq Bullish Percents have been mapping the action of 2007 very closely; the only real difference between now and then is the market is overbought but still strong (now) whereas in 2007 market breadth was waning before the eventual collapse hit.

($BPCOMPQ)

via StockCharts.com


So while small caps are doing most of the leg work on the dailies it's the tech averages which need watching on the weekly charts. When one looks to the action of the Nasdaq bullish percents between now and back in 2007 there is much to be concerned with; whether the indices can 'trade out' of these patterns into something else only time can tell. But is it necessary to be in the market while this happens? The simple answer is 'No'.

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