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Nine Charts of a Market in Long-Term Flux


It is presently unclear if the longer-term wave counts will extend upwards more significantly.

Moving on to equities, and starting with the New York Composite Index (INDEXDJX:NYA) weekly chart, there are two things that jump out from a price perspective:

1. The recent breakout above a 5-year resistance zone (bullish).

2. 8718 is still intact (not bullish -- not really bearish either, but important).

If you just take a "trade what you see" approach here, then this breakout can't be viewed as anything but bullish. If you take the "paranoid skeptical contrarian" approach (my usual favorite), then this is the last hurrah head-fake move that keeps everyone on the wrong side of the trade the whole way down. The bottom line here, though, is that no bear case can be seen in the price action at the present moment.

Click to enlarge

I've labeled the next chart with the bearish (blue) and bullish counts (black). Again, while RSI is overbought and suggests a correction, these types of RSI readings (with no divergence) seldom come at the exact top. Normally, we'd expect at least one retest/new price high with a divergent reading.

Click to enlarge
No positions in stocks mentioned.
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