Saturday, April 25, 2009
As I said in the previous post I'm having too much fun to come home. Seriously, only an idiot would think this is fun, but I do and apparently I am. I may stay an extra day or two as the weather and climbing partners are excellent. The fact that I'm knocking off project after project is also making it difficult to head home right now :-)
Continuing on to the stock market. The first thing I want to mention is the selling on strength data has now reach -620 million. Granted this isn't always a perfect timing mechanism but this kind of selling has almost always led to an intermediate top in the past.
Add to this the fact that insiders are selling 8 times as much stock as they are buying. The current level of insider buying is the lowest in 17 years. If this was the beginning of a new bull market one would think that corp. insiders would be buying stock hand over fist.
Lowry's also is not confirming this rally. Selling pressure spiked higher on Monday's 90% down volume day. Despite the continued rally into Friday, selling pressure is not backing off and buying pressure is not picking up.
I've noted on the third chart that we now have a weekly swing high in place on the S&P. This is one of the first signs to look for at an intermediate top. That being said I wouldn't be surprised if the market were to break through 875 early next week to soak up all the buy orders sitting at that level before rolling over.
We also have a potential 1-2-3 reversal in progress. A failed move to new highs on Monday would signal a 2b reversal. Something to watch for at Mondays close
Needless to say I think any break above 875 is going to be a false break. At the moment I'm leaning towards the counter trend rally out of the March lows either being over or very close to over at this point.
It looks like the market is being held up by the dollar declining into the daily cycle low. That low is due within the next 2 to 3 days. If the dollar continues to rally out of that bottom I think we will have the top for the stock market.
Almost all the short term indicators are again overbought. That also doesn't bode well for continued strength in the days ahead.
Shorts should probably continue to hold. As a matter of fact I think shorts would probably be advised to hold till we get the next weekly cycle low later this summer or or early fall. I don't expect this to roll over quickly to new lows by any means but we probably have seen or are very close to the final top of this rally price wise anyway.