Coolhand's Market Analysis

It was another big day for the bulls as they made it three straight gains in row. On the day, the DOW advanced 1.9%, the Nasdaq 1.88%, and the S&P 500 2.18%. In addition to those impressive gains, the EAFE (which our I fund tracks) was up an impressive 2.33%, while the Wilshire 4500 (S fund) was the biggest winner of the day with a gain of 2.82%.

Futures portended a higher open, and a higher open is what we got. Even a poor reading on the Empire State Manufacturing Index, which dropped to -7.7, could not change the positive tone of today's trading.

I had been looking for the S&P 500 to close above the 1200 line and today that index closed at 1204.49. That was the point at which I was going to get defensive, and I made the decision to do just that today as I transferred my 100% S fund position to 100% F fund.
We could certainly see more upside, but I'm a bit leery of this market after a 9% retracement off the lows in the S&P 500. I am also assuming that this is now a bear market.

Here's today's charts:



Well, given today's strength it's not surprising to see both NAMO and NYMO finally push back into positive territory. Both remain in a buy condition and may run further to the upside before this up-leg runs its course.



NAHL and NYHL only rose marginally today, and that may indicate that this bullish reversal is wearing thin.



TRIN and TRINQ dropped lower and remain in a buy condition. The problem however, is that they are both showing moderately overbought conditions. After three big up-days in a row, I'm not sure how much more mojo this market has, but volume wasn't particularly impressive today, so I'm not as bullish on these two signals as I was the previous two trading days. My guess here is that we have some short term weakness coming.



BPCOMPQ rose a bit more today and remains in a buy condition. It is also still under 30, which generally means an oversold market in the intermediate term. This signal certainly suggests more upside, but that doesn't mean we can't have some short term weakness first.

So all signals remain in a buy condition, which keeps the system in a "unconfirmed" buy condition, but because NYMO has yet to tag a fresh 28 day trading high, the Seven Sentinels officially remain on a sell. NYMO would have to rise about 14 more points to trigger an official intermediate term buy signal tomorrow. And that's possible should the market rally for a fourth day in a row.

I'm not sure I could trust a buy signal given how much we've already rallied. Especially if this turns out to be a bear market. But that's getting a bit ahead of myself. Let's see what tomorrow brings first.