I do not know when I will run out of road trip questions or how this milepost thing started but I will keep pushing it.
I wanted to wait until this morning to write today’s milepost in order to see what the overseas markets would do in response to our fantastic catch yesterday. (And the NE. Patriots were on last night). Basically they are flat to mildly down giving us a flattish open. As far as direction today one needs to listen to the market. Yesterday I was bullish on the day today it is a toss-up that goes to the bulls simply because of trend, but I reserve the right to change my opinion and my trades based on the open and several indicators such as the advanced/decline lines and our 52 week new highs which I present the NYSE, NDQ and Rut below:
Observations from the NYSE: Yesterday we flattened that rising 5 days which in the past has signaled a sideways rest area. Note also that this grouping of New Highs is higher than the previous two sets. That is bullish.
Observations from the Nasdaq Market: Our 5 day unlike the NYSE is still pointing in the strong upward direction. This grouping of new highs is lager than the last group , but smaller than the first. We could still be building here.
Observations from the Russell 2000: Our 5 day is fine but unlike the NYSE this group of New Highs is lower than the previous two, but this wave could still be growing.
Yesterday’s runt bar is really noise and can be tossed. The starting line yesterday morning was moved back about 10 S&P points and since about 50% of all new highs are made during the opening 60 minutes, and the market played catch-up during that time, the bar becomes somewhat dwarfed. Today with a flat open we should be able to get more information on the underlying sentiment of this market.
For verification today I will watch closed the RUT new highs. This bar needs to build today to show where we are in this leg. A turn down of the 5 day like the NYSE would indicate sideways and a rest. A new higher bar would signal more upside to come.
If we did go sideways from here, that would be a new market high with lower 52 week new highs, this is the type of sentiment entropy we are looking for to signal a top. It is still too early for that call, but today’s action will put another piece of the puzzle in place.
The Russell has done a great job catching up but now it needs to show a little leadership like 60+ new highs today to keep me in the thrust mood. If you are in the room I will post some RUT new high data through out the day, that should help us stay on the right side.
Today with new data we should be able to decide if we can pull into the rest area or if we have to stay on the road and make “good time”.
See you in the markets-
Marlin aka: redliontrader
