Mike
07-18-2011, 10:48 AM
With the Dow Transports today failing the 50-day I now expect that the rally has failed.
The Transports you might remember is the index I chose as the leading index because it made new 52-week highs in advance of other indices. The transports is a narrow index but significant in that it is sensitive to the economy. The transports index had a short term flirt with new highs and now appears to be rejecting a market breakout to new highs. In my view this points to the market going lower from here. With the late-stage nature of market leaders this outcome should be no surprise but still we wait for confirmation. I expect the other indices to now fail the 50-day.
The market can go anywhere it wants and when it wants but today it wants to go down. The decline is so far on light volume. There a quite a few stocks moving up on volume today: TZOO is breaking out. Pocket pivots may be forming on: WLT, TZOO, AAPL, SSRI, DECK, CHKP, HAL, NOG, WYNN, CLF, BHI, EW.
The strength in these stocks is interesting. We are not it seems in a market liquidation phase of a downturn. It is clear that investors don't agree on the near term direction of the maket. So we may continue the sideways motion that the market has been in since the beginning of the year.
The Transports you might remember is the index I chose as the leading index because it made new 52-week highs in advance of other indices. The transports is a narrow index but significant in that it is sensitive to the economy. The transports index had a short term flirt with new highs and now appears to be rejecting a market breakout to new highs. In my view this points to the market going lower from here. With the late-stage nature of market leaders this outcome should be no surprise but still we wait for confirmation. I expect the other indices to now fail the 50-day.
The market can go anywhere it wants and when it wants but today it wants to go down. The decline is so far on light volume. There a quite a few stocks moving up on volume today: TZOO is breaking out. Pocket pivots may be forming on: WLT, TZOO, AAPL, SSRI, DECK, CHKP, HAL, NOG, WYNN, CLF, BHI, EW.
The strength in these stocks is interesting. We are not it seems in a market liquidation phase of a downturn. It is clear that investors don't agree on the near term direction of the maket. So we may continue the sideways motion that the market has been in since the beginning of the year.