Coolhand's Market Analysis

Another bout of early weakness led many traders to once again get defensive or even go short, but true to form the market rallied back closing mixed on the day.

Internals were not looking good early on and I felt the need to issue another morning alert about the possibility of getting a Seven Sentinels sell signal by the close, and while the market did indeed come back in large measure it was not enough to avert an unconfirmed sell signal from the Seven Sentinels. That means the sell signal has not yet been confirmed by a NYMO 28 day trading low.

Overseas markets have also been weak. China reported a decline in their trade balance, which helped continue a negative tone in the Eurozone when it began trade. Speculation of more bailouts in the EU continue to weigh on sentiment over their as well. And of course this carries over to our own market.

But for all the weakness the market continues to be resilient, but for how much longer?

Today's sell signal was not issued on an ugly move lower, but was more nuanced. Let's take a look:



NAMO and NYMO are both on sells, but just as important is the fact that NYMO needs to fall below -22 to confirm a sell signal. It is currently at -7.94.



Two more sells from NAHL and NYHL, but only barely.



TRIN and TRINQ are also flashing sells.



BPCOMPQ moved sideways today, but still crossed the upper bollinger band triggering a sell condition. I would prefer to see a move lower here to trigger a sell, but since NYMO has yet to confirm it, it may be a moot point.



Here is a better graphic of the NYMO 28 day trading low. We can see this signal was lower on 15 December and that's the point it needs to fall below to confirm a sell signal.

So the Seven Sentinels remain on a buy, but have issued an unconfirmed sell. It may be an early signal that gets confirmed in the next few trading days, or it may also be a near miss in which case the system remains on a buy. But it's something to keep an eye on as we move forward.