Advance/Decline

As I mentioned a week ago in the "Flat trading and volatility" post on February 14, 2010 the Nasdaq 100 index is at its January 26, 2010 high, while the S&P 500 and DJI indexes run over their January 26 and February 3, 2010 highs. So, I may only say that advance decline indicators that signaled the oversold level and coming reversal (see my "NYSE Advance Decline" post on February 4, 2010) have been paid out...

I think many traders, including some readers of my blog, were skeptical about reversal on February 4, 2010 after the market close when I published my thoughts about NYSE advance/decline reading. I believe now, those traders may consider re-evaluating their opinion about advance/decline indicators. Advance/decline indicators is not something that would generate signals several times per day. However, I'm ready to wait patiently  (even for several months) in order to have ability to play such perfect signals.

Coming back to the technical analysis, the next question would be whether the indexes will run to their January 19, 2010 high levels. There are several factors that would favor the continuation of the recovery from the recent correction. First of all the, the last week recovery did not generate any volume surges to the price up-side. Which tells that, so far, this up-move is stable and there are no any abnormal trading activity that may cause shift in supply/demand balance in a favor of bearish traders. The majority of technical indicators remain to be bullish, especially on higher time-frames.

On the other hand, when you take a look at lower time-frames, you may notice that many indicators are overbought in short-term, by signalizing a possibility of some retracement, at least in a short-term. The stock market (majority of indexes) right now is in the range of its side-way trading where it was in period from November 10, 2009 until December 18, 2009. This is another factor that may suggest a possibility of staking in this range for a while.

Overall, I would say that the odds are still good for indexes (Nasdaq 100,S&P 500 and DJI) to run to their January 19, 2010 highs (of course not in one trading session). However, shorter-term time-frames suggest possibility of some move down and I would monitor it to see if it may grow into something more bearish.

Please, bear in mind that those are my personal thoughts, and before relaying on my words I would highly recommend taking look at charts and technical analysis by yourself. I'm sorry I'm not posting any chart snapshots today. I think majority of my readers are traders or other people interesting in stock market, who, as a rule has access to charts.