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Advanced Technical Analysis



Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.

Friday's action was notable for a few things: first, NYSE volume was an enormous 2.4 billion shares (top 5 all-time) while the INDU made a new intraday high unconfirmed by the NDX and the SPX. Second, breadth was negative all day even though ticks had their best showing in a week. These conflicting signals, when taken in the context of the sentiment extreme, the DeMark daily trend exhaustion indicators and the potentially completed wave count up from at least the October lows that we have been talking about for the last few weeks, suggest that these are terminal conditions (signaling the end of some degree of trend) rather than the beginnings of an important push higher.

As we stated in last Wednesday's note, all of the right conditions are in place for a potentially meaningful decline but we must first see a "5" wave decline on the 13 minute charts in order to suggest that such a decline is imminent. With the INDU making new peaks Friday, clearly that index has not yet declined impulsively. The SPX may have but we'll need more price action to confirm it. Heartening (to the bear case anyway) is the fact that the high-beta indices' (NDX and SOX) decline does look more impulsive (5 waves) than it does corrective (3 waves) suggesting they might be leading the rest of the market (as they so often have over the last two years). No clear picture has emerged at this juncture: we'll await a clean "5" wave move down to suggest that a trend changing peak has been registered.

No positions in stocks mentioned.

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