Thursday, October 23, 2008

No New Lows on Lower Close - But...

The Nasdaq and S&P each made a new lower close, but there were fewer stocks making new lows - implying strength. Although prior reversals were accompanied with spikes in the number of new lows, this association has not necessarily generated meaningful bounces.

The double bottom is more tenuous, but it hasn't been thrown out the window. Demand exists at the two prior spike lows; there was a modest fight by bulls into the last hour of trading Wednesday. But one could also call for a break of intraday support of consolidation triangles - certainly a bearish turn (not helped by stochastics and Rate-of-Change at neutral levels). If markets continue their downward slide in the early part of Thursday's trading it will likely kill what chances existed for a bottom based on the double bottom idea.

My latest Zignals post on the Variable Moving Average is available here.

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website