Key technicals align this week in major stock indexes

Fibonacci forecaster

Stock index, chart, technical analysis Stock index, chart, technical analysis

We are about to find out just how good that top in the DAX is. Last week I came here to tell you of great reading for the German chart. Here we are, a week later and it’s still holding. It’s being challenged by a surge that helped create a new high in the Dow. So let’s get to brass tacks. The new high in the Dow from Friday is in the 260 week window from the 07 high and has met the minimum requirement for a cycle high as the first major chart finding a new pivot high in the time window.

Whether it holds is another story. All I can tell you is the selling came seemingly out of the blue the rest of Friday. The markets rallied on the decent jobs number but it didn’t have the feel of a euphoric market. Why? Because half the country wasn’t too happy about it. Sorry to say but the feeling from the political arena is spilling into financial markets. Just as the civil war in Syria is spilling over the border into places like Turkey, the feelings of turbulence have to be spilling over to the market from the Presidential race.

Hey, it works both ways. If the incumbent is going to stay in the lead because the market has been up all these weeks you can’t help but think there must be an element of the trading community who actually agrees with Jack Welch’s assertion the jobs number was cooked. Rick Santelli believes it. I don’t think it’s possible to cook the numbers and many believe the system they use already cooks them enough. But it’s all relative; this is how Labor does it, has done and will continue to do it. So I didn’t really feel the euphoria nevertheless we hit the time window and markets started selling on Friday.

The question is whether this is the start of something big. For now we are getting conflicting information. Unfortunately the Chinese market was closed last week and they are trying to turn up on a162 week pivot. They have a good start with short covering but they’ve had good starts before and seen them come to naught. The US Dollar continued to drop, breaking different levels of support. If it went this far I think it can go all the way back to the September low but that might require the patience of a saint. Tech is usually led by Apple Computer which suddenly can’t catch a bid. It will be exceptionally hard for the NDX or NASDAQ to sustain this week without AAPL. Oil is trying to find a low but hasn’t quite done it yet. It looked like the SOX had found a low but it left an upper tail on Friday just at the wrong place that could be a bearish polarity flip.

Nothing bad happens when banks are good, right? Even the BKX stalled out on Friday just south of a new high. We don’t have a reversal yet nor do we in the HGX Housing Index but any follow through in either could tip them over. Do you see a theme emerging? With just a little more bearish activity we could tip the market away from the bulls and give control to the bears. We’ve had an earlier high in the NASDAQ where calculations are good enough for a high. But we didn’t have readings in the NDX and here’s some good news for you. The readings in the Dow high are more heavily weighted to time as opposed to price which means that after years of doing this work, even if the market tips in favor of the bears we could end up with a nasty correction given the time window odds DO NOT FAVOR a return to a real bear market based on the information we have now. Nothing is guaranteed but I do not see a perfect storm sitting in the Dow peak like I have with some other highs over the past few years. In fact, the 2011 high in terms of the information I use was more powerful than the high in the Dow right now. That doesn’t mean we are in the clear, we could experience a Cat 1 or even 2 out of any potential turn in a big anniversary window but the odds that we’ll get a repeat of 2007-09 are low. But that could change if we get different highs with different calculations in the next 2 weeks.

So the jobs numbers are better. Why all the commotion? Nobody is fixing the numbers. C’mon now, the people who are complaining the loudest know a lot about how the stock market’s fortunes get tied to the economy. The stock market has been up since last December and since June 1 in the least. The numbers, any economic numbers had to start getting better sooner or later and I suspect GDP numbers will also be better than anticipated when they come as well if for no other reason than a sustained rally throughout most of the year.

I’m sure it has something to do with the disappointment most GOP supporters feel over the fact the challenger finally had a better week than the incumbent. However you slice it, you hear a lot of stories about how this, that or the other candidate just continues to spew misinformation, the perception is that Romney won this debate. I’m sure he did simply because he looked a lot better. I have to tell you this, I spend some time on popular social media (not as Fibonacciman) and I’ve found out just how misinformed many Americans are about facts of all stripes. Just the other day some guy told me he thought the US didn’t enter WWII until after the Soviets already won the battle of Stalingrad. The point is a lot of people have no way of checking the facts, don’t even care what the facts are and only too willing to believe what their candidate is telling them.

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