ajtj99's Market Pulse

[ajtj99]

Shack, the SPX has me concerned, but for different reasons than yours.

Divergences.

You may recall I really pounded the boards about the divergences on the way up in the Spring. That eventually evolved into the Happy Family Theory of Markets.

Well, we have a couple of ways of looking at the SPX move here. One is that we are testing the August 28 lows at 991.43.

The low on Aug. 28 for the NDX was 1309 and the COMP was 1773. The Dow low that day was 9247.

If we apply happy family for a test of a low from a particular date, we can test these levels and be in compliance as far as lows from that day are concerned.

The problem with this is that it produces a divergence in the re-trace percentage with the SPX and NDX. I think in this instance it may be prudent to follow your lead and lop tech together and non-tech together with their respective re-traces.

The alternative is that the divergence in the SPX and NDX could be addressed at a later date if we hold these Aug. 28 lows, bounce, and reverse after October expiration.

The divergences on the way up in the spring were a red flag. If we are pointed down, they will just as useful.