|
Correction In Progress
by Carl Swenlin
April 24, 2009
Last week I wrote: I am expecting some kind of correction, possibly a short consolidation -- a week or so -- or a quick, scary couple of down days. So far we have had a little of both. Monday the S&P 500 had a scary -4.3% down day, and the rest of the week prices moved more of less sideways, recovering all of Monday's losses by mid-day Friday. For the week the market had virtually no change. The price action helped to relieve the short-term overbought condition, and broke down a small ascending wedge that had been forming over the last few weeks (not drawn on chart). The break down was technically expected, but, being a short-term formation, not much downside follow through was expected either.
Note that the support of the declining tops line, recently penetrated to the upside, is continuing to hold.
The medium-term overbought condition has not been relieved in the least, as you can see by the breadth and volume indicators below. If the current mini-bull market (bear market rally) is not over, the overbought conditions do not have to be a problem, because prices can grind higher or sideways as overbought indicators move back toward the neutral zone. At this point we need to be attuned to how well or poorly the market behaves as the overbought conditions clear. The better the behavior, the more likely that the rally will continue higher. The worse the behavior, the more likely the bear has stopped resting.
Bottom Line: The market continues to behave in a positive way in spite of being overbought. Support has held, and the needed correction has so far proceeded with virtually no price damage. It is still early, but it is possible for the internal correction to continue without a substantial decline, or even with prices moving higher. My opinion is that bullish influences still have the upper hand, and that the bear market will not resume yet.
. . . .
* * * * * * * * * * * * * * * * * * * * *
Technical analysis is a windsock, not a crystal ball. Be prepared to adjust your tactics and strategy if conditions change.
* * * * * * * * * * * * * * * * * * * * *
|
|
2008 TIMER DIGEST RANKINGS FOR DECISION POINT
#17 Intermediate-Term Stocks (52-Weeks) (TD Index 111.9 Vs. SPX 61.51)
#4 Bond Timer (*TD Index: 112.32 Vs. Bonds 118.26)
#5 Gold Timer (TD Index: 126.33 Vs. Gold 104.61)
#9 Long-Term Timer (2 Years) Stocks (TD Index: 132.35 Vs. SPX 63.69)
#2 Long-Term Timer (3 Years) Stocks (TD Index: 150.38 Vs. SPX 72.36)
#2 Long-Term Timer (5 Years) Stocks (TD Index: 168.82 Vs. SPX 81.23)
#3 Long-Term Timer (10 Years) Stocks (TD Index: 159.36 Vs. SPX 73.48)
2007 TIMER DIGEST RANKINGS FOR DECISION POINT
#40 Intermediate-Term Stocks (52-Weeks) (TD Index 91.9 Vs. SPX 103.28)
#5 Bond Timer (TD Index: 105.85 Bonds 104.39)
#2 (Tied) Long-Term Timer (2 Years) Stocks (TD Index: 117.63 Vs. SPX 117.63)
2006 TIMER DIGEST RANKINGS FOR DECISION POINT
#11 Intermediate-Term Stocks (52-Weeks) (TD Index 111.3 Vs. SPX 113.6)
#3 Bond Timer (TD Index: 112.32 Vs. Bonds 97.46)
2000 TIMER DIGEST GOLD TIMER of the YEAR
*All timers are assigned an Index of 100 at the beginning of the year. The amount above or below the starting index indicates the percentage gain or loss for the year.
Beginning in 2006 we began using mechanical models -- the Trend Model for Bonds, Gold, and Long-Term Stocks, and the Thrust/Trend Model for Intermediate-Term Stocks. Prior to 2006 we used discretionary signals.
|
* * * * * * * * * * * * * * * * * * * * *
BIO: Carl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of DecisionPoint.com, a premier technical analysis website specializing in stock market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association.
|
Back to Chart Spotlight Menu
