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Nice week - As I mentioned in my previous "Advance/Decline Signal" post on October 4, 2009 "there are some strong signals of a possible reversal and, personally, I would more closely watch charts over the next couple of days and I would consider that it could be too risky to be in a short position without tighter stop-loss at this time." those indicators that were bearish on February 2, 2009 became bullish on Monday February 5, 2009 and we had further recovery from the correction for the rest of the week.
Now, the main US indexes (S&P 500, Dow Jones Industrials and Nasdaq 100) are at September 17-23 high levels. Since index stuck for a week at these levels in September there is a possibility that we may see some sideway trading or a decline again. However, if we take a look at technical analysis of the same indicators we would see that only Advance/Decline Oscillator, McClellan Oscillator and MACD point to the Bearish sentiment and possibility of a decline. The rest of technical studies show shorter-term oversold stage, yet remain bullish or neutral by pointing higher odds of further up-move.
On mine opinion the most bullish signal for me is an absence of high volume during the recent up-move. We may see strong bearish volume surge on October 1-2, 2009 and this volume surge could be considered as a critical in the resent reversal. However, we have not been seen any highlighted trading activity (volume surge), which may shift supply /demand balance, during the recent up-move. Because of that I would say that there are good odds we may see indexes breaking September’s highs, yet as I mentioned before that we may see some sideway trading and even a decline before that.
Overall, I would say that my technical analysis of hourly charts (1 bar = 1 hour) does not have any leading indicators that would signal a possible downturn. However, I would not recommend rely on my words. What I would recommend is to check chart by yourself: what looks bullish today could become bearish tomorrow.
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