(I’ve added a new page, The 5/10 & 9/20 Daily Chart Methods. Check it out by clicking the tab just above this post.)
The market had a powerful move on Friday and this has pushed some, but not all, breadth indicators into overbought territory. Were it not for the weekend, I would normally expect a pause day for the following session but I’ll go with that anyway.
We broke out of the Bull Flag pattern on the $SPX chart in text book fashion, and this also occurred on all the other indexes and key ETF’s. With a $TRIN close at 0.67 there was certainly a lot of buying going on but much of it may have been forced buying as shorts covered. Well, there are certainly more shorts to be squeezed so we are probably not done with the upside, just yet. I mentioned about week or so back that we could be looking at a double top formation coming into play and I think that’s what we could be looking at now. And by that I am not talking about the 1400 areas of April and May, but the 1374 area from the first of the month. I could easily be wrong about this, either way, but since I’m long right now, I, of course, would like the market to make a run at 1374 before it turns and heads south. I posted on Friday that I would like to hold my current long position into AAPL’s earnings. Yeah, well don’t hold me to it.
Something I have noticed over the years is odd pumps in the transportation index before market turns. If you look at a daily chart of $TRAN you will notice that before the general market turns you will see huge candles in the transports. On Friday $TRAN was up 2.23% while $SPX was up 1.65%. I really don’t know why the general markets rallied the way they did on Friday so I’m even more clueless as to why the $TRAN rallied so hard. Just a heads up.
Chart of $SPX showing the clear break of the Bull Flag. Not shown, but $SPX is also back inside the rising trend channel that I’ve had on my charts for a while.
With the addition of the 5/10 & 9/20 page, , the last one I intend to put up, my work on the site is drawing to a close. I will do some editing now and then including putting up different charts as I see fit. My intention has always been education, to put up a system of market analysis that gives one a better understanding of what’s going on on the surface of the market as well as under the market hood. I have developed this system over several years but the real epiphany came about three years ago when I stumbled upon $NYUPV and Zweig Breadth Thrust. These, and the other breadth indicators that I follow, produce numbers and for me numbers replace emotion. I have gone back as far as 2000 and cataloged numbers for the breadth indicators that I use. This is how I established the high/low lines on the charts I use. For you the hard work is done but if you’re going to understand and use the system then you must track and log breadth indicators daily. This process will take you from 30-45mins a day, but in doing so you will be able to ‘see’ what’s going on and for you much of the veil of mystery that surrounds the market will be lifted.
And it’s not as if there are a whole bunch of you out there visiting the site and learning the system. Several months back I posted that I was getting somewhere around 20-40 visits per day. Now it’s up to around 100-150. The important thing about the market is that if everyone is using the same methods, then those methods become diluted and eventually useless. With as few visitors as I get, this isn’t likely to happen with my methods.
Incorporate my system into what you’re already doing. Adapt it. Improve it.
Be careful, and GL in the week ahead.