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Point & Go Figure: Midweek Market Review



Short-term Overview:
The short-term conditions, extended and in high-risk areas, have finally crossed the threshold to negative territory on the NYSE, and will likely soon follow on the Nasdaq.

The percent of stocks above their 50-day moving average for the NYSE reversed to negative following Tuesday's market action.

% of Stocks Above 50-day MA, NYSE
(Chart courtesy Dorsey Wright)

Intermediate Overview:
The intermediate picture has deteriorated as the percent of stocks above their 150-day moving average for the NYSE and Nasdaq both have moved closer to reversing down following lower long-term peaks, an important, long-term bearish divergence.

The NYSE percent of stocks above their 150-day MA is within 1.5% of reversing down and could do so with today's action. The Nasdaq percent of stocks above their 150-day MA is further away from a reversal down than the NYSE, but the pattern of longer-term lower highs for this indicator dating back to the peak in 2003 remains well intact.

Long-term Overview:
While the bullish percent charts for the NYSE and Nasdaq remain in Xs, the pattern of lower highs (meaning diminishing breadth and participation) combined with their relative high risk level, continues to suggest we are closer to a conclusion of the cyclical rally that began in October 2002 than to the beginning of an important new leg higher. The reversal in the short-term indicators will confirm the increasing likelihood that an important new leg down in the longer-term structural bear market is beginning.

Charts of Interest:
Newmont Mining Corporation (NEM)
(Chart courtesy Dorsey Wright)

Google (GOOG)
(Chart courtesy Dorsey Wright)

Google (GOOG)
(Chart courtesy Thomson Financial)

To see a Google (GOOG) vs. Yahoo (YHOO), monthly chart showing the recent GOOG price peak relative to YHOO all-time high, click here.

No positions in stocks mentioned.

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