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Point & Go Figure: Midweek Market Review - AAPL, GOOG, OSX




Short-term Overview:
The short-term conditions remain negative with the Percent Above 50-day Indicator for the NYSE, Nasdaq Composite, S&P 500, Nasdaq-100 and Dow Jones Industrial Average all negative and showing continued deterioration.

Meanwhile, according to figures from Investors Intelligence, the High-Low Index for the NYSE reversed down as well yesterday. The Nasdaq High-Low Index has held more firm than the NYSE throughout the most recent negative market action, but it too declined yesterday, and is now 2.8% away from a reversal down. Both are at high-risk extremes.

Intermediate Overview:
The Nasdaq-100 Bullish Percent
reversed back down to 60% and is now very close to breaking a double bottom on the chart, the first double bottom break since August 2004.

Looking at the chart below, however, one can see that this double bottom break - if it occurs, will take place at 58%, a level of far greater risk than the last double bottom break which occurred in August 2004. This bullish percent measures participation by just 100 stocks, so it can move quickly. Meanwhile, the pattern of decreased participation and lower highs remains intact dating back to this indicator's peak at 90% in June 2003.

Bullish Percent for Nasdaq-100
(Chart courtesy
Dorsey Wright)

The Dow Jones Industrial Average Bullish Percent remains negative. The S&P 500 Bullish Percent is positive, but in high risk territory and deteriorating.

What these bullish percent indices are saying is that fewer stocks are participating in each rally.

Long-term Overview:
While the bullish percent charts for the NYSE and Nasdaq Composite 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 down in some of the short-term indicators has raised the risk that an important new leg down in the longer-term structural bear market is close to beginning.

Charts of Interest:
Apple Computer (AAPL)
(Chart courtesy

Google (GOOG)
(Chart courtesy

PHLX Oil Service Sector
(Chart courtesy

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No positions in stocks mentioned.

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