Mid-Week Market Update
Courtesy of David at All About Trends
The best way to sum up this week’s action is "It’s A Market Of Stocks ". We’ve seen some really nice moves in many of our featured names with some nice paydays as well.
THE MARKET IN REVIEW
As you can see we are also overbought stochastically speaking as well. This is another reason we decided today to pullback on the throttles if you will.
Zooming into the 60 minute Time frequency allows for a more magnified view. The pink line on the chart above is the same pink line on the chart below. It’s a inflection point to say the least.
A break of the pink line could take us to the lower blue line ultimately, but the first stop would be that pink line and then net nowhere for 2+ months again. Here too even in a shorter term time frequency we’ve got that overbought level flashing stochastically speaking.
Moving on to the OTC composite
In a recent report we said:
With the dailies showing overbought and an up up and away move we want to watch for an initial pullback in the indexes to short term new support levels. For the SPX and OTC that would be right back to their initial breakout levels as shown above. Those pullbacks ought to relieve the overbought nature of the daily charts, then we look for another move higher baring an unforeseen news driven event. It’s in that potential move higher that our current watch list ought to shine.
If we are going to top it will most likely be after we pullback then make another run attempt.
Those comments still stand.
We will add one thing though and that is the chart below.
This chart covers the OTC composite off the 2002 lows and was our most recent cyclical bull market. What we want you to notice is in almost every single year this index has run into the end of the year and then went into a correction shortly thereafter. Folks we are in that window. It can happen at any time. Personally big picture you might want to stop thinking about the next 20-30% up move and start to think more about how am I going to protect what I’ve recently recouped off the March 2009 lows. After all, the last time something of this magnitude happened it took 25.3 years to retest the highs.
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