Whoda’ thunk? Not me.
I mentioned over the weekend that I thought $TRAN could bounce up to the 20MA. It did that and closed above it. Never thought that would happen, especially so soon. That is bullish as $TRAN is the lead dog.
Many of the breadth indicators that I watch went to extreme overbought levels today. Normally you would expect a pause of one kind or another on the following day, but in this market it’s anybody’s guess.
$TRIN closed at .22, so that’s twice this week that the $TRIN has closed below .30. Based on the few samples I was able to find, I predicted that on Tuesday the market would be up anywhere from 2pts to 20pts. Possible we’ll see some more upside tomorrow.
60 minute chart of IWM:
IWM certainly had a stellar day, but what about tomorrow? I say let’s do it again, but I don’t think that’s possible. ‘Course, I’m probably wrong. All I know is that when the RSI on the 60min chart gets above 70, you just have to be prepared for some kind of pause or pull back in the following session.
Chart courtesy of FreeStockCharts.com
Daily chart of $SPX:
The daily charts of all the majors using this particular set up look about the same as the chart below of the $SPX. No denying today’s action has put a shine on the markets. Won’t take much for $SPX to break out of this symmetrical triangle. What I would like to see and what I’ve wanted to see for a long time is for the ADX to rise up through the falling -DI line. It won’t happen this week, unless we have another 50 pointer, but it could happen early next week. That would be very bullish, IMHO, of course.
This week’s action, at least so far, is why I don’t short and why I don’t advocate shorting. To me, it just isn’t worth the trouble.