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Coolhand's Market Analysis

It Was Due

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by , 12-28-2011 at 05:24 PM (1309 Views)
I would have been surprised if we got through this week without any selling pressure given our 71% bulls vs 19% bears sentiment survey results for this week. So today's action was hardly unexpected.

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Aside from bullish sentiment, news out of Europe that deposits at the European Central Bank hit a record 452 billion and that the central bank’s balance sheet has expanded to a record 2.73 trillion also served as a reason to take profits.

So we got our selling pressure, but it remains to be seen if the worst is over. We're still in the midst of positive seasonality and that shouldn't be taken too lightly if one is a bear.

Here's today's charts:

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NAMO and NYMO moved below their respective 6 day EMAs and flipped to sells today.

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NAHL and NYHL also flipped to sells.

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TRIN spiked to a sell, but is also highly suggestive of an oversold market, which often means a bounce is imminent. TRINQ also spiked to a sell, but is only moderately suggestive of an oversold market.

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BPCOMPQ actually ticked a bit higher, which isn't surprising as it's a slower moving indicator. It remains in a buy condition, but any follow through to the downside will probably turn it lower and flip it to a sell.

So all buy one signal are now flashing sells, but the system remains in an intermediate term buy condition.

The Seven Sentinels are nowhere near triggering an official sell signal. NYMO would have to drop another 100 points over the next few days to do that, and that scenario is highly unlikely in a seasonally positive trading environment. I am looking for a bounce tomorrow given the high TRIN reading and TRINQ also supports that possibility. I don't know if the market can retrace all the losses by the end of the week, but I anticipate lightening up a bit more on any bounce. If we remain weak through Friday, I may hold my current allocation into the new year.

The last two trading days of 2011 are upon us.

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