Ian Woodward's Investing Blog

In my Overview of the newsletter, I stated two hurdles that the Market Indexes must jump, one short term and the other long term, as follows:

Since the Ides of March when we found a bottom on March 17, we have now bounced on a decent Bear Market Rally to the tune of 11% to 15% depending on the Market Index.  We have weathered the storm for now from back then and are at a critical juncture yet again:

1. The glass ceiling of getting past the 200-dma is uppermost on our minds.

2. The 40-period Bollinger Band Chart must see the Indexes above the orange line of the middle BB.  That is the true test of whether all Indexes are fully on the mend.

Here at a glance are the results comparing the status yesterday versus today, with color coding to show which Indexes are well above, barely above, very close or not there yet as shown in Dark Green to Dark Red, respectively: 

• The results were encouraging as of yesterday, but today’s big drop in many Indexes now leaves a lot more work to do before these two hurdles are jumped.  We were so close but yet so far, so never count your chickens before they are hatched!

• Note how the picture has changed overnight from Mostly Green to a Blinking Red.

• The Transports lead the pack, the Nasdaq 100 is strong, but the S&P 100 and Russell 2000 are weakest.

• Yesterday’s market action was promising to begin with and then fizzled at the end, so today we had our second shot across the bow that we are pausing to refresh at least, or a modest pull back…hopefully at worst. 

• The VIX has not signaled a Little Kahuna but came very close (+0.23), and now we must see if there is a follow through Kahuna.  This will be the next shot across the bow and time to take heed of the potential correction that might ensue…run for temporary cover, and watch for further developments.

• The Report Card for the favorite leading Wolf Packs is favorable…no signs of major Rotation yet, despite a heavy down day on the DOW.  Beaten Down Groups coming out of the ashes such as Semis, Technology and Home-Builders were all hit yesterday and today. 

• Worth Watching if market holds – LDK, EME, MEA and CAM  

  Here is the picture on the Industry Groups:

                 Best Regards, Ian

This entry was posted on Tuesday, May 20th, 2008 at 6:11 pm and is filed under HGS Principles, Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.