Somewhere Down the Line We ll Be Together Again
Lines. Lines. Everywhere are lines.
Nosotros discussed the uptrend line in the Dow last week. Needless to say it finally broke on Friday. If yous use simply lines on the chart - non necessarily how I view the market, since I adopt indicators to lines - you can see the bottom of support now shows up around 34,000.
Still no one looks at the Dow as you lot know. They watch the S&P 500. And the S&P 500 has a line every bit well. The Dow's line goes back to February (so information technology's longer in duration than the S&P 500) while the S&P'due south goes dorsum to May. The S&P 500 has five touches on its line, which means information technology's a good line, as well. You lot can see that after Friday'due south decline, information technology is at present closing in on the lower line.
The upper line has been a good guide for united states since the leap when it comes to pullbacks, so there is no reason to think the lower line shouldn't be good back up either fifty-fifty though my guess is the lower line will show upwards on every screen out there by Mon, if not before. In other words, information technology is quite obvious, and I prefer when we suspension a line anybody watches because that creates a better shakeout.
If we look at the indicators instead of the lines, it's a different picture. My own Overbought/Oversold Oscillator is not oversold. I tin can't brand it get oversold either equally the math behind it says it won't exist oversold until later this calendar week. Notice that information technology is still hovering simply over the zero line for both the NYSE and Nasdaq.
If you adopt a different visual on the oversold condition, then allow's apply the 'what if' for the McClellan Summation Index. Here we see what information technology will take to turn the Summation Index from the current downward to back up. Currently, information technology requires a net differential of +1,400 advancers minus decliners on the NYSE. At +ii,000, it steps a toe into oversold territory. And then here too, it says some more downside would get information technology to an oversold condition.
So we accept a marketplace that is getting close to support but not quite oversold yet.
The good news is that the number of stocks making new lows is not expanding. Recall most of the summer my complaints were how new lows refused to contract. That is not the case now because last week they sold their honey mega cap tech stocks, non the stuff that has been down and out.
The other adept news? My Saturday Twitter Poll showed 59% looking for more than downside for the Southward&P and 41% looking for upside. In the last sixteen months that I take been running this poll, each time the spread was that wide the S&P saw an upwards calendar week. Twice it began the week on the downside though. That would be my preferred scenario (some more down beginning) because I'd similar to get those indicators oversold. Will the market suit me?
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Source: https://realmoney.thestreet.com/investing/stocks/lines-lines-so-many-lines-15766040
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