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DAILY TECHNICAL MARKET COMMENT
*These are preliminary numbers and will be adjusted tomorrow The DJIA gained 95 points and the S&P added 7 points. Volume was well below what we saw on Friday coming in at 922 million shares. The A/D line added about 250 units. The new highs were about flat with Friday and the new lows eased. The Russell 2000 lost 1.09 points. It traced out a small reversal pattern and closed on its lo of the day. The short-term is neutral. The medium-term is neutral but weak. The Value-line gained 5.40 points but closed well off its early high and closed about mid range. The short-term is neutral. The medium-term is neutral but weakening. The NASDAQ Composite gained 25 points and the NASDAQ 100 gained 35 points. They closed about in the middle of the days range. They are neutral both short and medium-term. The DJTA gained 24 points. The short-term is neutral as is the medium-term. The DJUA and UTY closed with modest gains. The short-term is neutral but close to turning down. The medium and long-term is neutral.The S&P did nothing yesterday to help with the short-term wave counts. The rally from last Thursday to Friday is a three-wave pattern and the pattern from that high is also best viewed as corrective. I cannot rule out the possibility that a move below Friday’s low will occur to complete a more complex corrective pattern from Friday’s high it is most likely that the rally into that high is the “a” wave of a larger pattern. This should lead to a move above Friday’s high to complete the rally from Thursday’s low. My preferred count at this time is that this rally is best counted as a “c” wave of a triangle that began on February 23. A move above last weeks near 1272 high would invalidate that count and would also confirm the decline from January as complete on the weekly chart. I am approaching the rally on the DJIA from last Thursday’s low as either a “c” wave of a flat or triangle from February 23 or as a second three from that same low if the DJIA moves above the February 27 peak. I am still not clear on the bigger picture in this average and for now I will stand aside. The rally late last week on the NDX is a clean three-wave pattern on the hourly chart. I am counting this rally as the “a” wave of a larger pattern and expect to see a move back above Friday’s peak. However, the rally did stop right at a .618 retracement of the decline from February 26, a decline that is a clean five on the hourly chart. So, while I do have my preferred count a move below last weeks low would invalidate it and argue for the possibility that the NDX is about to enter a third wave from February 26. As long as that low holds we should see a move back above last weeks high. Support: S&P: 1226-1228, 1214, 1198-1200, DJIA; 10,400-10,420, 10,280-10,300, 10180-10,200, NDX; 1840-1860, 1740-1760. Resistance: S&P 1251-1252, 1268-1270, DJIA; 10,750-10,765, 10,900-10,925, NDX; 2000-2008, 2100-2120. The averages all closed higher but the DJIA continued to lead the way while the NASDAQ averages lagged badly. The S&P was in the middle not as strong as the DJIA but stronger than the NASDAQ as it did join the DJIA in closing near the session peak. The NASDAQ averages closed closer to the mid point of the daily range. The DJIA was, however, the only average to come close to Friday’s peak while the NASDAQ and the S&P were far below it. One thing they all had in common was the fact that they traced out inside days (lower high, higher low). This pattern usually leads to big moves short-term. The market did close well or at least the DJIA and the S&P did. However, the rally was accompanied by a very sharp drop in volume and that does seriously detract from the positive close. Breadth was only slightly positive and did lag but it did a lot better on Friday so yesterday could have been more of a readjustment. The new highs did not expand but were close. They are slightly positive while the new lows have eased and are neutral. The CBOE put to call ratio eased a bit. It was not real negative but it did ease. The OEX ratio was quite negative and well below 1.00. The Rydex ratios are slightly positive but we still need to see more from the Arktos and Ursa funds. The breadth oscillator is neutral. The volume oscillator is slightly oversold but easing. The 3-day oscillator is neutral. The McClellan oscillator is also neutral having worked off its recent oversold condition. The 10-day and open 10-day Arms have eased a bit but are still oversold and positive. The 5-day Arms is neutral but close to oversold while the 21-day Arms is oversold. The daily range oscillators are neutral but weak. The daily trend oscillators are negative. The rally yesterday was more of the same and although the averages all closed higher the DJIA was clearly the winner as it far out paced the S&P and the NASDAQ. Even the broad based NYSE Composite lagged badly as it was up only 1/3 as much as the DJIA. The rally like last weeks rally was accompanied by a sharp drop in trading volume reflecting a lack of conviction on the part of the buyers. Some of yesterday’s decline in volume may be due to the pending storm on the east coast but not all of it. The market can rally for a bit on low volume but not for long. Technically we are about in the same place as we were yesterday. Momentum indicators are mixed with volume related measures closer to oversold levels while breadth related measures are neutral. Short-term sentiment is still OK and both the Rydex ratio and the CBOE put to call ratio can support some further gains in price on a very near term basis and that also fits in well with my current Elliott wave counts suggesting a rally back towards last weeks high in the S&P is a likely outcome. However, at this point that is the best I see and that is not enough to justify anything more than a neutral ranking for the short-term. Medium-term nothing has changed. I am still of the opinion that we are close to completing a very good medium-term low but that there is still further work ahead of us. I am neutral on the medium-term. Long-term I am bearish. The bonds are expected to remain in their trading range for a while longer. Short-term I am neutral. Medium-term I am bearish. The XAU rallied strongly and closed near the high and is most likely in wave 5 from February 14. A move above the February 27 high is expected. I remain bullish in all time frames. Stock index futures traders are flat. Stand aside for the morning. Rydex switchers are holding a 20% Ursa and 40% Precious Metals position. Make sure to call the Noon Pacific hotline for any changes.
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