George Schaeffer says:
October 28, 2014 at 6:47 pm:
The R2K ($RUT) was up 2.86% today compared to a rise of 1.19% in the $SPX. $RUT:$SPX (relative Strength of $RUT vs. $SPX) is showing signs of a nascent uptrend:
http://stockcharts.com/freecharts/gallery.html?s=%24RUT%3A%24SPX
The A-D line recorded a plurality of +2098 with the DJIA up 188 and the SPX up 23 1/2. The McClellan Oscillator rose to +80 and it’s derivative, the Summation Index, has climbed from a low of -635 to today’s -220. Today’s breadth performance was strong enough in relation to the rise in the large-cap price indexes to be considered part of what PN Haurlan and Dave Holt of the former Trade Levels service called a “kickoff impulse”. And I think “impulse” (as in “impulsive”), rather than corrective is the right way to describe the market action since the 1821 SPX low.
IAWT says:
October 30, 2014 at 4:05 pm:
"This not acting like a corrective wave at all in my opinion. It hasn’t from the start. It looks like a sub dividing kick off rally wave. Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."
George Schaeffer says:
October 30, 2014 at 6:05 pm:
I agree with IWAT and have posted that the rally since Oct. 15 has looked like a motive wave more than a corrective wave because of the strong "kickoff impulse" characteristics it has displayed. This description is founded on the broad and deep market participation that has characterized it. With the McClellan Summation Index having risen to -90 from -635, we see objective evidence of a persistently strong A-D line. The chart pattern of the relative strength of R2K vs. SPX still looks like the early stages of an uptrend. It needs to surpass it's preceding high of .5858 to confirm that it's recent rally is more than just a corrective uptick.Again here is the chart of $RUT:$SPX:
http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX
The evidence in support of this rally being a corrective wave is Tony's OEW work and the V-shaped pattern the rally has traced out. Impulse upwaves tend to have a broader bottoming pattern and corrective upwaves are more likely to be V-shaped. The market was strong but somewhat mixed today with the DJ Transports down 84 while the DJ Industrials were up 221.
If the rally were to continue showing this kind of incomplete participation by market segments, I would consider that to be support for the corrective B wave thesis.
However the DJTA had posted a new high on Tuesday while the DJIA had lagged considerably. The strength of the Industrials this week, and especially today, combined with the weakness of the Transports over the last 2 days will create a better opportunity for a joint closing by both the DJIA and DJTA at new highs. This would represent a Dow Theory bull market confirmation and would also be bullish for the intermediate term trend, coming as it might only 2 -3 weeks after the low point of a sharp correction.
I should add that my agreement with IWAT does not include this part of his post:
"Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."
I don't expect a decline into Thanksgiving from today's close. After making new highs, we might expect a kind of consolidation before the rally resumes. The day before Turkey Day is often a good up-day.
George Schaeffer says:
October 31, 2014 at 3:14 am
The correction down to the 1821 low did not look nearly deep or long enough to me to be a P4, but it did look to be about the right magnitude for an M4. I believe that the surpassing of the SPX 2019 high will occur by Fri., Nov 7. If that occurs with good A-D line strength and wide price index participation, that will be strong enough proof for me that we have completed M4 of P3 and are now in M5 of P3. Tony's OEW group will probably figure out a wave pattern that describes recent price action in those terms.
Friday, October 31, 2014
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