Ian Woodward's Investing Blog

Critical Short and Long Term Targets for Indexes

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: 

comparisons

  • 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:

         industries        Best Regards, Ian

5 Responses to “Critical Short and Long Term Targets for Indexes”

  1. Paul R Says:

    Ian, EME very good suggestion!

  2. dave Says:

    Ian,

    What do you think of the fact that there were almost THREE times as many new lows today (Tues 5/20)as new highs on the Nasdaq ?? I find that somewhat surprising considering that the Nasdaq & NDX have outperformed the SPX since March.

    BTW, in my opinion, mid-caps have made the strongest recovery.

    Regards
    dave

  3. ian Says:

    Thanks Paul…with the four I mentioned, you could have paid for the seminar already in a day with LDK, but they all seem to be doing well 🙂 That’s how it goes in this market, you win some and you lose some. Ian.

  4. ian Says:

    Hi Dave: You are right on both scores…the Mid-Cap 400 has certainly performed very well. As you say the new lows on the Nasdaq yesterday is somewhat of a puzzlement, and needs watching. Fortunately the new highs on the NYSE have at long last hit the 150 mark (for one day,two days ago), but that is at least encouraging. At this time I see orderly profit taking and the Bears do not seem to be sending up major smoke signals as yet, but they may be plucking up courage soon.

    Best Regards, Ian.

  5. dave Says:

    Today (Weds) NYSE/Nasdaq NH/NL were almost a 2-to-1 mirror image of one another; up/NYSE;down/Nasdaq.

    I think the Fed is going to change margin requirements on crude soon. Today’s four dollar move sure looks like a climatic blow-off. Probably reminds some old Midland, TX wildcatters of a geyser. LOL

    Regards,
    dave

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