Ian Woodward's Investing Blog

The Stock Market is gradually coming to a Tipping Point, either up or down.  Like Old Soldiers that never die but gently fade away, it is taking its own sweet time to cave in, and the count is Strike 2 and Ball 3!

We will surely know which way this Market will go before the week is out, but I said that last week.  We can point to Head and Shoulders in the making, but then again, it only needs another couple of days push to the upside like today and we we would be pushing through a double top, so it’s all a Hair Raising Experience:

1184 is once again intact on the S&P 500, and there is breathing room for the Bulls to hold the line:

The VIX swung into high gear last Tuesday on 4/27/2010 with a >5 point jump in one day, leave alone two which is the normal yardstick one sees when things are beginning to turn, so the Fear Factor cannot be discounted.

Yet, some Leaders are still showing resilience as exemplified by AAPL, which has regained the higher ground.  It now needs to breakout to be convincing in its Leadership to propel the rest of the JIRM leaders to New Highs:

Keep your Powder Dry.

Ian.

Don’t want to be that alarming, but we can be in for a Minor Correction next week to start with.

It’s in the Balance as the Bears have already had two shots across the bow, and yesterday was the first leg of the third shot.  Each time so far they have been thwarted , so we shall see if they break the Rally to the downside on Monday.

The next two charts point to the Leaders…when push comes to shove, always focus on the Leaders, and the most recognized of these is AAPL, so keep an eye on that one.  It had great Earnings and produced a substantial burst to the upside.  The question is whether it can hold at support or show signs of a correction to 8% and then 10% down as shown.  Alternatively, if it holds, it will be a good sign for Up, Up and Away.

And then there is the JIRM Index which I have been featuring of late…it showed strong signs of being tired on Friday, and ominously like testing the 50-day Moving Average:

The Rot has set in with the third Phoenix in ten days and that usually suggests we are heading down for at least an 8 to 9% correction on the S&P 500.  The NYSE Index is already below the BB Bandwidth, and the others do not have far more to go to join it to the downside, all currently below the middle band.

In fifty-five Trading Days we have gone from an Eureka to signal the start of a new Bloom to Boom as shown and now the question is do we now see strong signs of a Bust to come?

I have brought back a chart we haven’t seen in a long while as the Bears have been starved for all of 14 months as shown by the Ratio of the Total Dollar Volume between the QID and QLD.  It has reached its lowest readings and the question is do the Bears now have their turn at a feast after a famine for so long.

Keep your fingers crossed and your powder dry. 

Best Regards, Ian.