frenchee, i have conflicting views right now. on one hand, from a technical point of view, i can see why some here may fell that friday could have been a head fake (based on things i follow). here are some arguements that appear to be bearish. -Up volume on nyse accounted for 75% of total volume and with nasdaq, the biggest percentage gainer, it was 77%. decent, but not great and not indicative of unquestionable conviction behind the move. typically with moves like on friday, we should have seen at least 80% or better up volume. -There is also the fact that the VIX printed a new low, and NYSE new highs came in at 416 vs 13. While those are not immediate ST bearish signals. -Next, if we look at the 10MA CPC and EPC, while the 10MA CPC remains neutrl, the ECP is near levels where tops have formed in the last year, not bottoms: http://stockcharts.com/def/servlet/SC.web?c=$cpce,uu[w,a]dcllnyay[d20020218,20041218][pb10!b10][vc60... -QQQ Options support looks to be uncertain, right now 37, but good get worse or better monday...just alot of volume on friday.
it just seems to me that if this market is trying to convince us that a rally is about to begin, it chose the wrong time to send such a message.
Now, what do i think will happen given the above? For monday, I go with my guy like Welles, but i have the opposite feeling, that monday won't be consolidation and won't be a reversal, but will be another big up day. That's gut however, and obviously if you're following a system, it's not what you want to follow. Having said what my gut is telling me, i decided (as should be done for any good biased position, LOL) to see what positives there are to justify such a position: -The one i had my eye one most of last week is probably no longer relevant as it appears to be off the table with fridays rally. I mentioned a couple of times last week that it appears after we bounced off the 200ema, the last 1/2 hour was showing buying into close with volume throuhout the wee. i think that "indicator" may have given us a clue that a big up day was coming. -Both the Composite and NDX are back above their 20ema. they do not tend to whipsaw much around that S/R, at least not for more than a day or so. The 20ema offered support several times during the recent rally. Once the top came, the biggest down day came the day after we closed below the 20, since then it turned back a rally attempt once already and here we are now, back above it and closing at the highs of the day. -COT data shows S&P commercials bought back for the second week in a row (still net short however) -THE WEEKLY NDX shows what might be considered a successful retest of the 2004 resistance, with largest volume on an up week since june of last year. still lower than volume that took us to down to the 200ema though. http://stockcharts.com/def/servlet/SC.web?c=$ndx,uu[h,a]waclyyay[pd20,2!f][vc60][iut!lb5][J31726589,... -more important probably, is that the S&P has had two positive weeks with ver good weekly volume. -Next Bradley turn date is due on the 15th. I believe it nailed the last two turns precisely. if is to nail this one, we should continue up next week.
Those are some pro's and cons. for early week my GUT won't shut up and (foolishly?) tells me to expect another big up day monday. As for blowing past 38.73, i was trying to calculate how much we would have to move to get there and found something interesting, which some of you might have observed. Anyone notice the QQQQ has been trading a rather large discount to the NDX, 1.6%? While i under stand there usually is a discrepancy, 1.6% seems alot...don't know what the significance is however, if any.
anyway..to move to 38.73 it appears NDX may have to move about 60 points (double check please)...with expiration feb 18th, possible, but the picture for me becomes a bit clearer monday..would like to see how all that that volume on those QQQQ 37 puts translate into OI.
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