Patience is power; with time and patience the mulberry leaf becomes a silk gown.
Chinese Proverbs, Sayings of Chinese Origin
The following content has been extracted from the Feb 2, 2010 Market update that was sent out to subscribers.
|
Moving average |
New Highs |
New lows |
|
20day |
430 |
503 |
|
100 day |
175 |
105 |
|
I year |
140 |
25 |
- 20 day moving average of new lows = 4615 (New all time Record set on Sept 16th 2008).
- 1 year moving average of new highs = 10 (New all time low set on Nov 25th 2008)
- 1 year moving average of new lows= 2225 (New all time Record set on Sept 16, 2008)
The number of new highs has moved up slightly but the 20 day moving average of new lows is still leading although the market has mounted a very strong rally over the past 2 days. Another revealing factor is that the 100 day and 1 year moving average of new lows are virtually unchanged from last week’s numbers. This action clearly indicates that all is not well in the markets as the internal structure is weakening.
In one week the Dow was able to take out 10400 and 10200 and the interesting part is that both price points were taken out on volume of over 7 billion share. If the Dow remains below 10,200 today it will have traded below 10,200 for 3 days and will now issue a stronger signal that it is ready to mount a decent to steep correction. The break below 10,200 is significant for it was the bottom of a channel formation that took shape from Nov 2009. A break below a channel formation, especially when the markets are extremely overbought usually produces a strong move in the downward direction.
Market update Jan 26, 2010.
The Dow traded as low as 10050 and Dow futures traded as low as 9994 and then bounced back very strongly. The break below 10,200 turned the trend negative but the Dow needs to stay below this level. Trends are determined by key price points and for a trend to remain valid the market…
