Monday, January 25, 2010

Tactical Market Timing as of Close of Friday, January 22, 2010

Tactical Market Timing as of Close of Friday, January 22, 2010SocialTwist Tell-a-Friend
Fari Hamzei
We went thru a tumultuous week of corporate earnings, political, financial and geopolitical surprises, some with dire unintended consequences. 

Those of you who attended my last market timing webinar held on Monday January 18th(, should remember my dire warnings.  Our charts had a series of bearish divergence setups.  Brad Sullivan's comments were also spot on.  Now let's go thru our proprietary charts:

Our Timer Chart shows a shallow rise, and not a hard spike, in Down to Up Volume Ratio.  This is a mood change IMHO.  SPX was at MR1 Level (Monthly Resistance One) on Friday OX (Jan 15).  Last three trading sessions, nastiest since prior March 9th lows, while producing a slightly higher volumes, pushed SPX down to MS1 Level (Monthly Support One).  Our CI Indicator turned south sharply.  No index was spared. 

Vols spiked.  VXO hit +4 sigma.  The intensity is worse than late October sell-off, and yet the McClellan Oscillator readings are higher than October lows.  IMHO, the selling has just begun.  Mid-day Friday, I posted this on Twitter:

Percent of SPX components above their 200 day Mov Avg reversed hard, breaking their 20 and 50 MAs.  Notice the divergence with price around the 95% Level.  This is NOT good.

Our coveted SP1 Indicator broke its rising trendline as SPX went thru its -2 sigma band and its MoMo brethren reached a short-term oversold condition.

Bottom-Line:  We should be nearing a short-term oversold condition culminating in a dead-cat bounce.  Tape feels HEAVY.  What is next could be very nasty for our fragile jobless recovery.  Not sure PPT can do anything about this one. 

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