Sunday, July 27, 2008

Qs weekly update

Qs up .68 or 1.5% for the week. DIA down 1.5%, SPY down .4 % and IWM up 2.6%.
As predicted last week, the IWM outperformed the Qs (and the other majors) although IWM currently showing short term technical weakness.
Approaching the new month bullish mode although the first 2 days of the month surge system has not been a recent winner.
Qs are showing consolidation at the 45 level, both on the daily and weekly charts.
No surprise. . .divergence of the mildly overbought daily and the mildly oversold weekly technicals. A significant reduction in volume of the past week in the Qs may reflect skepticism about the markets in general, or it may reflect a rotation of focus to XLF and the financials (for example, WM traded a record 335M on Thursday). A50 mildly overbought although the 200 DSMA looks like the next resistance level now that the 20 DMSA has turned upslope.
A200 briefly kissed the 200 and 50 DMSAs this week before the Thursday drop. Currently the A200 looks technically neutral but, as with the A50, the 20 DMSA is hinting at an upslope, and if it goes the Qs could repeat the Qs cycle to 50.
Confounding the probability for such a rise is a deteriorating economy, a housing foreclosure rate that is unlikely to abate in 2008, increasing unemployment, guidance lower by many recent earnings reports and a financial system rife with profound fundamental problems that are not likely to be remedied any time soon. Its popular to say that the markets climb a wall of worry, and frankly, there's a lot to worry about these days. I've added the NDX McClellan oscillator update this week since quite a few market technicians regard it highly. Currently coming off extreme overbought levels, the implications are bearish.
Hey!. . .nobody ever said trading based on technical analysis was easy. I've got a few ideas on the NAMO and I'll look at those Monday.
Posting next week will be light as I'm running a series of studies that will require much of the time I otherwise devote to blogging.
Glad to be in cash. Good luck out there.

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