Tuesday, July 21, 2009

Evening Summary: Very over extended, but anyone's guess.

Market continues to make higher highs despite overbought conditions and various sell signals being triggered over the past few days. It is worth it to keep in mind that when a market is able to make higher highs in overbought, it is usually a bullish indication looking out 2+ weeks.

Some observations this evening (conflicting odds between ST and IT):
  • Not since 1992 have we seen the nasdaq 100 close up for 10 consecutive days. There have only 7 other times when the nasdaq 100 has closed up for 10 consecutive days. While not scientifically significant, it is interesting to note that in 6 out of those 7 cases, the NDX was higher 1 to 3 days, as well as 10 days later.
  • DIA has closed up for 6 consecutive days. In 21 of 25 previous cases, the market was trading lower within 3 days
  • BKX closed down 3% while S&P closed up. In 9 of 10 previous occurrences, market was trading lower within next 3 days.
  • BKX topped 4 days ago and has made 3 lower lows as S&P has been making higher highs. Keep in mind banks led us out of this rally, and if there is a down turn coming, chances are they will probably lead the mkt down again.


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