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Buzz of the Street: Countertrend Rally Top?

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Some of this week's most insightful and timely vibes.

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All day and every day, some of the stock market's best and brightest traders and money managers share their ideas, insights and analysis in real-time on Minyanville's Buzz & Banter. Check out some of the best of the buzz and for those minyans not currently subscribed, click here for a free two-week trial.

Monday, August 24, 2009
Train Tracks at the Crossraods, Eric?
By Jeff Cooper



In my morning report I showed a daily chart of Salesforce.com (CRM) and how it had tagged what I call a "Live Angle". See chart here.


Click to enlarge


Mr. Market has a profound memory and penchant for geometry. As W.D. Gann said, "God geometrizes."

Would you have been a buyer or a seller with CRM kissing the intersection Friday/today?

It will be interesting to see if the Train Tracks that CRM appears to be carving out today will define a buying climax (similar to that of Amazon (AMZN) on July 23rd).

Tuesday, August 25 2009
Open and Close Case
By Kevin Depew

Take a look at the chart of TD Absolute Retracement Up.

S&P 500
CLICK HERE TO ENLARGE


The green solid line at the 1.50 level, 1025.07, means step one in the qualification process is possible. Remember, in order for breakouts to be qualified (=valid; indicated by a (solid green line vs. dashed green line) we must have the following:
1) a lower close, which occurred yesterday
2) a CLOSE above the level, which is possible today with a close above 1025.07
3) an OPEN tomorrow that is above today's close
4) at least one tick tomorrow above the open

This is very important then because we have so many TD Sequential 13s across so many indices on DAILY time frames.

For example, here are disqualified TD Absolute Retracement levels combined with TD Sequential 13s on other major indices:

Dow Jones Industrial Average
CLICK TO ENLARGE


Nasdaq-100
CLICK TO ENLARGE


FTSE-100
CLICK TO ENLARGE


As well, the Nasdaq Composite is currently on bar 11 of a potential TD Sequential 13 sell signal and the German DAX is currently on bar 10 of a potential 13, while both are simultaneously flirting with still disqualified TD Absolute Retracement Up levels.

So does this mean global markets have reached a counter-trend rally top? How can we put this in context of still incomplete signs of exhaustion on the weekly time frames?

On most weekly charts we still have a window of 2-6 weeks before we begin to see signs of exhaustion, and it is important to note too that within that time frame we will need a close above this week's close to complete TD Sell Setups on most of the indices noted above.

Putting that within the context of the daily 13s we have at least a couple of possibilities to consider.

Bearish Scenario: TD Absolute Retracement Up levels remain disqualified as the daily 13s assert themselves. As the weeklies reach exhaustion, the market concludes the counter-trend rally from the March lows.

Bullish Scenario: TD Absolute Retracement Up Levels are qualified, daily 13s only produce sideways to slightly lower action for a couple of weeks before exhaustion is reached, then market pulls back in a false move lower before continuing higher.

Bottom Line: The window of hope remains open for bulls to force more underinvested and bearish market participants to give up and join the fray. The qualification of TD Absolute Retracement levels would make any reaction to the 13 sell signals a buying opportunity heading into the last month of the quarter. A failure to qualify the levels will tell us if bears have an opportunity to wrest control of the market back from bulls.

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No positions in stocks mentioned.

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