Ian Woodward's Investing Blog

Gunfight at the OK Corral Coming Soon


The Stage is set for the Gunfight at the OK Corral

The Combatants:  Bulls and Bears: 

The Site: The Nasdaq with lines drawn at 2572 for the Bulls and 2387 for the Bears 

Early Signs of Who’s Winning: 

The Bulls:

  1. 4-dma, 9-dma come up through the 17-dma; later 17-dma up through the 50-dma
  2. A Eureka Signal with a Follow through Day of 35 points up and 2 Billion Shares
  3. Directional Movement: Di+ above Di-
  4. The Nasdaq Index gets above the 50-dma at 2572 and then above 2616…the Upper BB

The Bears:

  1. The Nasdaq breaks down through the 200-dma at ~2500
  2. The Nasdaq goes down below the Lower BB, i.e., 2460, and %B goes Negative
  3. The Nasdaq breaks the previous low at 2387
  4.  The Nasdaq drops over 16% from the High…down to 2290

Best Regards, Ian.

3 Responses to “Gunfight at the OK Corral Coming Soon”

  1. Theresa Says:

    Thank you Ian.

    Is it alright to use the same yardstick on SPX & RUT?

    Theresa H

  2. ian Says:

    Hi Theresa: Since I know you use the 4b key to understand the buy and sell signals, I chose line items that would be instantly recognizable when you look at the charts. Please look closely at the Indicators on the chart and that is the reason I chose to say that they are at a standoff. All three are within a smidgen of either being at their Zero Line or of crossing over. You know the Ready, Set, Go strategy…they are saying wait. You also know that they must move up with conviction, so that is only one of many things you would look for…all of which I have covered in spades in all the previous notes that are there to digest.

    Having said that, there is a big difference between the Nasdaq and S&P 500 chart patterns relative to their Moving Averages versus the RUT. The S&P 500 has had a very similar move to the Nasdaq, so applying the same criteria to its chart would be virtually identical. However, as you can quickly see, the RUT (Russell 2000) is a lot weaker than the other two and has already had a 14% correction, but has not even climbed back above the 200-dma. If the bottoms are re-tested, it is far more likely that the RUT will drop below its imprint lows recently made, and that will confirm that the heavy weights (Large Cap and upper Mid Cap)stocks are the place to be.

    Best Regards, Ian.

  3. Paul Says:

    Great stuff. I’m in my foxhole, and I’ll be waiting for 2,572.


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