Hello again readers! Sorry I missed Thursday night's post.. some other stuff came up of higher priority. But, I promise to make it up to you with lots of great charts today! Overall, the big picture view looks slightly scary, but the shorter term view looks like we may see a little more volatility in the market as it melts up a little higher before a larger pull back. Allow me to explain.
In my daily scoring system (above) you will see that the RumWave score is quite green. This would normally indicate an increased probability of a move to the upside. However, my criteria for purchasing long positions has not been met, and it would take a very big move to the downside to turn on the "green light." Oddly, there is a little bit of a BULLISH divergence (yes, bullish) on the RumWave chart. I'm going to look back to see if this has happened previously, but for now it indicates that a short term move higher is not out of the question.
Long term chart views:
The chart above is a weekly view of the S&P 500. Same thing as the Dow, it looks ready to turn over, but it doesn't show signs that it has already started. The RSI is still sloping upward.
Last, we'll look at the Russell 2000. It is an index of small cap stocks. I like to look at it because I've previously observed the small caps leading the large caps lower. If we are able to see that happen, it can give us a "head's up" that the major averages may be about to roll over. So far, the Russell 2000 has not shown signs of turning over, but the candles are showing a drying up of the momentum, and the oscillators at the bottom of the chart are all firmly in overbought territory. However, this has happened before. You only have to look at the left half of the chart to see the Sep '11 to Apr '11 run. The RUT, in that case, rode the high oscillator level for a long, long time.
GAMEPLAN FOR NEXT WEEK: Remain nimble, occasional tactical level (short term) gamble plays, but no strategic (long term) long or short positions.
GOOD LUCK NEXT WEEK!
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