Tuesday Nov 1, 2011
The most reliable indicator is the NYSE Weekly A/D line. Let's get in, as Mr. Peabody on Rocky ad Bullwinkle used to say, the Way Back Machine to 2007-2008.
NYSE Weekly A/D 2007
Hmm, the market bottomed in early August, then rallied back to the then recent highs, see top panel. But the A/D line made a notably lower low at the end of that rally. Not as many stocks were participating. The breakdown in the MAs makes it clear what was going to happen.
NYSE Weekly A/D Now
Now as then the 34 day EMA caught the indicator and it rallied back. But it just made a lower high. At top the actual price index is also lower.
So the march towards lower lows has begun. We will regularly update this comparison for a potential road map of what to expect.
lookat this chart: http://
finance.yahoo.com/echarts?s=%5EDJI+Interactive#chart4:symbol=^dji;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
It's a 2 year chart, shows a double top and with the recent rally failing now, there is more downside risk through the end of the year then upside potential
Posted by: valentin tristan | November 01, 2011 at 03:53 PM