Tuesday Spin

While I really want to feel good about the price action, and take the giant leap to the Magenta Heart on the daily chart, this stuff is just not doing it for me. While price traces out a consolidation OBV has been weaker. A/D is it’s usual self, but I see something there that bothers me.

Okay they tapped on that support line three times, now it is time to enter? The action in MFI is mostly positive. The purple lines which correspond to overbought signals, and the yellow cups which show were the oscillator caught support. Nothing to project from here. After the close I’ll put up the daily chart which is ominous, my gut really likes this action, the bears have not been able to knock this market down. The bulls come in, make a little flurry, and then step back to watch what happens, are the bears going to sell into it? Increasingly the answer seems to be no.

The next stop is 397. We need some new trend lines, my best work with trend lines comes at the opening perhaps the first few minutes when a pair of long shadows sets up a line AND there is a confirm shortly thereafter. Not seeing it. This is choppy and the money flows are not diverging, except A/D and that one has the appearance of vulnerability.

Rally top appears to be rolling over. The MFI could go overbought and perhaps the A/D will rise again, and OBV will meander higher. That new dotted blue line would constitute the all clear I think on OBV.

My instincts tell me the A/D has been moving ahead as though nothing was wrong – now takes a dip back to the converging trend lines. The upper trend line really no little or no significance anyway. The gold line has the aces. We need a touch, and really a break to get some capitulation.

Now it’s entirely possible that A/D can break and the other money flows can pick up the slack, that would the 95′ rally at the turn. That would be very good I think.The investment banks have been out of this since December and that should end sooner or later. Does it end with capitulation, or exhaustion? Or does the entire market take a turn for the worse.

On the one hand a lot of damage has been done, but on the other the market is so far past the old support levels that it could take years to retrace even a half Fibonacci (wherever that is) I note that Chris Vermuelen is a smart and sincere guy, who did pretty well with the method on the way up, but at the top the rules changed.

I am looking for some new intraday trend lines, that will help guide us, but really the money is the thing. There’s a lot of it and it has no where to go and on days when bond yields jump 5% or more, you know some of it is going there, but that is not a problem. That sort of investment can be rehypothecated. I had this conversation recently and at what percentage the LAL is calculated depends on the kind of paper you are borrowing against. So there….

407.5 is the actionable level at present with support at 397. As long as the money is noncommittal those arbitrary lines remain valid.

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