Thursday, October 15, 2009


Above is a 15 minute bar chart of he NYAD. Long term readers know the NYAD's my hands down, #1 marker for determining short term market direction and momentum. Without it, the success rate of my trades would suffer considerably.
Now every chart is subject to personal interpretation and one man's bull is another man's bear but what my feeble brain derives from this NYAD chart is basically a failure of momentum carry through over the past 5 days.
Although we've gotten some nice pops at the open, these moves have been faded more often than not into the close.
This type of follow through failure leads me to be suspicious of longer term strength in the markets. Yes, the headlines each day remind us that the recession is over and that the good times are once again just around the corner (without any jobs, unfortunately).
But a bit a caution is warranted here.
Over at the Quant Wizards site I've been posting bullish forecasts for the past 2 weeks based solely on the markets' proclivity towards whole number reversals. . in this case Dow 10K and SPY 1100. With Wednesday's action we are there and the odds for retracement increase exponentially. Thursdays are statistically the highest probability pivot high cusp days so we may get some up side spill over before the pullback, but I'm personally going to 90% cash for a bit.

In further support of my cautious to bearish scenario . . the PDQ dashboard as of Wednesday is showing negative momentum in each of the 4 open Qs long positions. This is unprecedented in the 15 market days I've been monitoring the Qs basket positions and the net conclusion is once again failure of the bullish algorithm as maximum 6 month historical intraday drawdowns approach.

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