Thursday, March 19, 2009 12:19:38 AM
I don't know S2...
HUGE positive divergences (RSI; MACD vs Price) on the weekly SPX chart.
The 5-period RSI on an index is a new concept for me so I won't speak to it's effectiveness but you know all oscillators can stay oversold/overbought for long periods of time. Just look at the period between Feb 17 and Mar 9; the RSI(5) was oversold basically the entire time yet the $RUT lost over 20% during that timeframe. It isn't implausible to think that the same index could gain 20% while the oscillator is in an overbought condition.
That said I agree that the market should take a moment to consolidate right here; I'm just not sure how long or deep the consolidation will be. I think the SPX can make it to the 815-830 area before staging that consolidation and we have no idea if this wave ((4),5,A) will is over...theoretically it should be a 3 wave move that peaks in this general area.
Finally, this move by the Fed is a major shift in fundamentals, the wave count may need to be revised...its hard to imagine anything short of a retraction that can counteract a catalyst like this.
HUGE positive divergences (RSI; MACD vs Price) on the weekly SPX chart.
The 5-period RSI on an index is a new concept for me so I won't speak to it's effectiveness but you know all oscillators can stay oversold/overbought for long periods of time. Just look at the period between Feb 17 and Mar 9; the RSI(5) was oversold basically the entire time yet the $RUT lost over 20% during that timeframe. It isn't implausible to think that the same index could gain 20% while the oscillator is in an overbought condition.
That said I agree that the market should take a moment to consolidate right here; I'm just not sure how long or deep the consolidation will be. I think the SPX can make it to the 815-830 area before staging that consolidation and we have no idea if this wave ((4),5,A) will is over...theoretically it should be a 3 wave move that peaks in this general area.
Finally, this move by the Fed is a major shift in fundamentals, the wave count may need to be revised...its hard to imagine anything short of a retraction that can counteract a catalyst like this.
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