Big Changes Coming?

Using the pivot points as the exent of the current trading range (which, in reality, we have been nowhere near all month), the mid point represents the “bull/bear” line, and had been support for  most of the month. We finally closed below it, so now we are in short term bearish territory, and the former support will now likely be resistance. The market has weakened, but RSI is still above 50. There are two ways we can look at that” the market is not as weak as it seems, or, alternatively, that gives us a lot of room to drop. With volume as low as it is, any drop isn’t likely to be very big, and I would be surprised to see us go as low as the 50dma.

The Nasdaq is still well above the middle point, is just below the previous high, and the price realtive line continues to rise. This is a major factor in propping up the rest of the market, and if the rest of the market starts t rally, this could break out.

The NYSE composite is riding right along the center line, neither bullish nor bearish. The price relative line is continuing a reversal of a long trend, and we may see a major change in the market soon. Changing from what to waht, I don;t kn ow, but I do think we are in for a big change.

Here are the sector ranked by RSI. XLB has vaulted into first place after being at or near the bottom for months, a sign of big rotation in the markets. In the next few months, we may see some major tur arounds in some really beaten up stocks.

XLB is right up against a pivot point, so we will liely see some resistance here, but notice the last sell signal this got, a couple of weeks ago: that was a false alarm, indicating this is in a bull phase.

XLU, on the other hand, has recently has a valid sell signal, and is in a bearish phase, It is on support right now, and will likely get a bounce here, but right now any move up looks shortable.

A big change appears to be coming, but with the market in essentially a sideways trend, it is impossible to know which way we will change. I do expect to see some big rotation soon, and will be looking at some of the beaten up areas of the market (mining stocks come to mind), for some opportunities to exploit it.

I will have the new highs update shortly.