Logical Resistance

This is getting interesting: right into the 50dma, then dribble down for the rest of the day. Fortunately the volume was pretty low, so this may just be a pullback at the first test, but we should be careful here, because this is right about the place we would expect a dead cat bounce to stop. We should,a t the least, have support at the 200dma, but right now it isn’t looking that likely that we will go that far.

Despite what looks like a nasty reversal on the Nasdaq, the price relative line is still rising, and is now in a confirmed up trend, which means the market will likely stay in an up trend as well. Relative volume here was a bit higher, but not high enough to be worried about yet.

The Dow industrials were nowhere near a resistance level today, which means they could reverse and move higher without too much trouble. the price relative line here continues to decline, which is also bullish.

The Russell 2000 is now above the 50dma, held it today, but did stop at the early November high, which was where I thought it most likely to hit resistance. The  price relative line here is also in an up rend, and it is now most likely that we will hold here somewhere, reverse, and make another try at resistance.

Today’s reversal was not pleasant, but it did come on low volume and at logical resistance points, so for now we are still in bullish condition.

I will have the new highs update shortly.

2012-12-04 01:40:39

Source: http://samuraitrader.blogspot.com/2012/12/logical-resistance.html