The Morning Cup of Jo
I'll find some action somewhere !!!
The night before last Hoofy and his "Bull" friends stumbled out of Birdland just after closing. He felt so horrific the next day, yesterday, he could barely make it to work. By 1:00 in the afternoon he decided to go home and that's when all hell broke loose.
When the Dow broke 10,420, the latest relative support set back on January 29th, it was a straight drop-off. The first thought was the prior support of 10,360 would hold, but to no avail, off she went. The volume on the NYSE accelerated past the 50-DMA by 13% - the highest volume since February 11th.
Following the break came a lot of talk (banter) about the individual sectors within the markets and what may be holding, what's left of support, up. So today, instead of revamping the brutality of yesterday, I thought I'd keep my banter short and show what I would consider the Crazy 8 - The major indices left in the proverbial deck. Or better put - the ones left in the 'Above 50-DMA' club.
Whether you're friends of Hoofy and looking for longs, or friends of Boo and looking for the next possible shorts, these sectors merit a look either way.
1) The AMEX Biotechnology Index
You'll notice it's keeping the ST Trend and still well above the 50-DMA.
You may also notice the RSI and Stochastic are acting fine and no current signs of divergence.
2) The AMEX North American Telecom Index
Here may be a little more risky for you bulls. However it's still holding on. You'll notice the RSI and Stochastic are showing divergence and if it breaks the ST Trend it will also be the 50-DMA.
3) The PHLX Housing Sector Index
This one is easy - all clear on the western front. Also you'll notice a Bottom Stochastic Divergence prior to the breakout of last week. However, there is a possibility it will pullback and retest the Floors & Ceilings.
4) The CBOE Oil Index
Looking fine for now but could also retest the ST Trend and the 50-DMA.
5) The S&P Retail Index
Once again, a possibility of a retest, not only of the BO (break out) but the ST Trend and the 50-DMA.
6) The AMEX Broker/Dealer Index
OOPS - Stuck one in that just fell out of the club. This one speaks for itself. Notice the Stochastic Divergence.
7) The PHLX Bank Index
So far so good. Needs to keep its ST Trend and 50-DMA. This one could be a major player in any further destruction in the Major Indices.
8) The AMEX Pharmaceutical Index
This one's had better days. You'll notice it's currently holding the semi-angled Floors & Ceilings support but it's already broken the 50-DMA. I mention this one for another reason (save the best for last). Yesterday on Buzz & Banter I had a question about this index building Dandruff. To help illustrate my answer I put the horizontal line in the graph.
My belief is that there is a very small Head & Shoulders Top (started in January) that could be breaking right now. However, we have to look at the bigger picture, which is a larger H&S Top started back in December. This pattern is only partially complete - it still needs to go down to the neckline and build the right shoulder.
I'd like to leave you with one IMPORTANT fact. None of the indices shown above have volume associated with them in their graphs and as a techy, this is the most important indicator other than price. In other words, make sure when looking at the individual equities, making up these indices, you check for light pullback volume and/or large break out volume.
Until next time...
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