JTH

Just cruising over the charts, I can’t help but notice the lack of enthusiasm from many of the charts. The good news is the Nasdaq, S&P 500, and the Dow Jones Transportation Average have put in higher highs.

However, along with most everything else, those same charts have put in lower swing lows than the previous swing lows. So the big question for me is where will the next swing low be? Will it be higher or lower?

Sometimes I like to watch the price action on the S&P 500’s Equal Weighted Index. While the Earning’s reports have helped the bigger components move this market higher, you can see when equally weighted, we have yet to put in a double top. I’ve drawn in three possibilities to help me identify where this market could go.




The S&P Financial Index looks to be hammering in yet another lower swing high.




Thus far my favorite chart would be AGG. My previous analysis (not my IFT timing) played out rather well and I was pleased to see we put in a higher swing low bounce off a rising 20 MA. For now, I’m watching for a potential Ascending Triangle and if it plays out, then that could be a great way to look for the direction of stocks.




Another important piece of the picture is Oil and the all mighty U.S. Dollar. The Dollar appears to be testing support’s lows and should it fail to hold these levels, the I-Fund could reap some nice profits.




On the other hand, Oil doesn’t look healthy. It could be topping out at these levels and waiting for the next lower swing low. While in the short term that could be great for stocks, eventually it may get too low and start dragging the markets down with it. My biggest fear is that Joe-Public will see the lack of demand for oil and how it directly relates to the lack of production.

The two red circles represent the 20 MA crossing under the 50 MA. Also, if this chart falls below its 200 MA, than I’m looking for a 20 Dollar bottom in oil…




Although this post might seem Bearish, I’ll be holding my positions 10-G, 75-F, & 5-CSI until we get confirmation of a direction.

Cheers… Jason (whose stitched up dog is doing well)