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Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Wednesday, October 06, 2010

Stock Market -- Technical

The rally since the end of Aug. remains intact. However, it is clearly overbought in
the short run. My 6 week breadth flame indicator is a +87. A reading of +100 suggests
a strong short term overbought, with a + 50 to indicate a mild overbought. My buying
pressure index has advanced strongly in this rally to a new cyclical high as has the
NYSE adv. /dec. line -- good signs. My intermediate term 40 week oscillator has
turned up and its smoothed moving ave. has been rising for several weeks -- another
good sign. As the chart link shows, the 13 week m/a is closing in on a rising 40 week
m/a -- I like that too. Chart.

The chart also indicates a rather mild and volatile uptrend off the early Jul. and end
of Aug. lows. If this pattern holds, you can have a continuing advance with some steep
downdrafts thrown in. That would not be a happy pattern and may be an unlikely one,
but that is what is shaping up now.

There has been an 85 trading day cycle that has been in effect at least since the middle
of 2007. Of the cycles I look at, this one has been reasonably reliable. The next low
in this cycle is slated for late Oct. Since lead-ins to these lows have been relatively
gradual, the cycle suggests that the market might retreat over the last two weeks of
this month (Remember pay attention to cyclic movements, but never bet the farm on


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