9/18/09 - (Some graphs not shown here)
Are there any confirming signs that intermediate or long term cycles, which have been
lingering in upper reversal zones and whose 80 period cycles on the Filtered charts have been in
decline, are really going to come down and give a bigger "pause that refreshes"? Let's look at
the factors that matter.
First, where are indices trading on the daily charts? Both the Dow and NASDAQ are in the upper
half of the Donchian channel and that channel is rising. Still bullish.
Second, new highs vs. new lows. Are they weakening? No, still pretty strong at 464:1 on the
NYSE and 161:5 on the NASDAQ. Bullish.
How about stocks trading above key moving averages? A month ago, the percentage of stocks
above their 20 DMA was at 57%, yesterday - that closed at 85%. Still bullishly trending. What
about the 200 DMA? That percentage is at 92% vs. 88% a month ago. Bullish also.
What about short term cycles, any pattern of lower highs or lower lows? We saw that pattern
developing before the 9/1 intermediate "dip", but now we are actually seeing short term cycles
"linger" in the upper reversal zone, which is actually...bullish.
The chart above is the DDM. A double beta ETF that mimics the movement
of the Dow but at twice its velocity. If the Dow is up 1%, this ETF should be
up 2%. Inverse ETF's,like the DXD move opposite of the Dow, so that in a
declining market, it will move UP 2%, when the Dow moves down 1%.
Still trading above the 5 day moving average, and is that average trending up? Yep...bullish.
So there you go. This market continues to act like 2003 with intermediate "dips" instead of
drops. We've had several days of bullish moves on the faster 30 and 60 minute charts with the 8/8
crossover that played the rise well, and if you want to play it even slower but still get intra-
day signals, try a 120 minute chart. It turned up on 9/4 with an 8/8 crossover, and is still
rising.
Of course short term cycles will cause another "dip" soon, but I went through this exercise to
show what we can do to stay with any lingering trend as long as possible. I'm playing shorter
term charts still, and still, the best plays continue to be to the long side.
