Tuesday, October 26, 2010

Weak Market

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Today was one of the day when the S&P 500 did not reflect the opposite trend of US Dollar - US Dollar Index went up, yet, the S&P 500 index remained flat. There could be two explanation of such behavior: a) the patter is broken and S&P 500 and US Dollar trend will not be correlated, or b) the S&P 500 index will catch it later by stronger movement down.

In my Sunday's "US Dollar and S&P 500" I mentioned that if October 21st high is broken than it could mean that bulls are taking over. This high was broken on the S&P 500, DJI and Nasdaq 100. However, the break out was very weak and the indexes retraced back down. I would not like to be in a long on such weak trend. There are too many negative signals on the leading indicators for me to be Bullish. It could be premature to play short, yet I would not bet on any bullish signals right now. I would rather stay in cash.

Worth checking:
 - DJU (Dow Jones Utilities) index is already in correction
 - DJT Bullish volume surge on October 23, 2010 extremely strong;
 - Starting from October 14, 2010, the US Dollar shows the possibility of recovery;
 - Yes, the S&P 500, Nasdaq and DJI are trading close to their highs, however, the trading is very weak;
 - Despite the fact that S&P 500, Nasdaq 100 and DJI are close to the top, advance decline volume and issues ratios for these indexes are trending down.
 - Huge volume surges in period from October 13 until October 20, 2010 have to be played out somehow on the supply/demand balance...

P.S. Advance decline and volume indicators for US indexes could be found onwww.MarketVolume.com

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