Saturday, January 24, 2009

Weekend Review: Testing November Lows

The attempted bounce in the S&P stumbled as stochastics fell back into oversold territory as the index feels for support at November lows. This same story repeats for the other indices.

Only the Russell 2000 shows evidence of strength, it's bullish 'buy' triggers holding in the face of recent selling, but for how long?

Sentiment indicators also struggled; the nascent breakout in the Bullish Percents dropped back into its prior consolidation, but are well off their lows (not a good thing)

Same for the S&P Bullish Percents (and it crept in with a 'sell' in stochastics):

Stochastics for the Nasdaq Percentage of Stocks above the 50-day MA switched to a 'sell' signal adding further bearish pressure to the Nasdaq

Summation Index completed its reversal off resistance:

Dangerous times for markets; sentiment suggests the 'Santa Rally' was nothing more than a 'bull trap' and considerable losses could follow. Price action suggests a test of November lows, but nothing to say markets can't go lower.

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