Time For Another QE Rumor

Judging just by stochastics and MACD, it looks like we are in for a correction, with the 50dma the most likely target. However, judging by volume, we may not get that far. The last pullback we got, at the end of July, was pretty mild, and so far, I would say this one is shaping up that way as well. ATR has dropped almost as far as it was near the April top, whih by itself isn’t encouraging for the bulls, but the fact that it just fell from a very elevated level makes it more unlikely that it will start moving up soon. Until proven otherwise, this is starting to look like a dip buying opportunity. 

The Nasdaq 100 has done a pretty good job of catch up on the way up, and is doing a better job of holding up on the way down. That is also an indicator that we may be in for a shallow dip here.

The Russell 2000 is the odd man out, lagging on the way up, leading on the way down. that will not look good on a bullish resume, and is a pretty clear warning sign that the market is in for real trouble in the future. How far in the future is not known, but probably not too long and probably real trouble. If this continues I expect the Fed to be out in full force with more QE rumors.

The percentage of stocks above the 50dma in the NYSE is still firmly in bullish territory, but is falling and, worse yet, is falling from above 75. That means, from a historical perpective, it is far more likely to go down to 50 than back up to 75.A break of 55, and we are in a confirmed correction, one that could last at least a couple of weeks. If we keep going and break 35, the bulls are down for the count for at least a month

This is the same indicator on the Nasdaq, and it is in serious trouble, barely hanging onto bullish territory and falling fast. I don’t expect this to hold 50 (barring another Bernanke intervention), and we could see a very quick  drop from 50 to 30. If so, mark it as a correction, of unknown duration or depth.

I have 3 charts here telling m the market is not yet in trouble, but 2 that tell me it may be in serious trouble. Right now I’m tending toward the former, but well aware the latter could be the case. I may start looking for short positions tomorrow, just in case.

I will have the new highs update shortly.

2012-08-23 16:04:08

Source: http://samuraitrader.blogspot.com/2012/08/time-for-another-qe-rumor.html