The week was a Thanksgiving shortened week with a debt crisis thrown into the middle. Last week I called for a rally to 1105 followed by a sell-off to 1060 area - the range turned out to be 1111.50 (off by 6.50) and a low of 1067 (off by 7). So I must have made a bundle? I did ok for the week selling my longs at the 1105 mark but I never convinced myself that the sell signal I was trading under was reliable enough to climb in short. The market breadth remained neutral while there was no real downside price action. (it all came in overnight)
So the good news is I wasn't in the market after Wednesday. The sad news was that I didn't have enough confidence to trade in short. Now I am stuck outside in cash and waiting for the market to setup either further down or for another thrust upward.
You can review the indicators for the week's close in my previous post on Saturday:
Zweig - Bearish
40 DMA % Index - Bearish (from intraweek bullish)
10 Day High – Low - Bearish
NYSE 52 Week New Highs - Bearish (close to neutral)
They all point to continuing weakness. The strongest indicator is 52 Week high which is setup to issue a buy signal sometime this week if there regains any pricing strength.
My original schedule for a bottom in this correction was November 30th, which is Monday. If we do sell-off hard on Monday I would expect Tuesday to be some-type of bottom forming day. From there we would have to see if we are gaining any breadth momentum. Until I see that I will stay and trade short waiting for 1050 to see if that will hold.
My outlook is for short, looking for a bottom around 1050 and then a rally to ???. I will need to see some indicators mid-week to make that call. Tuesday will be an important day.. Monday is important too.
So to put it short. I believe there is more downside to come, at least until the 40% DMA index reaches that 50% number.
Make sure to follow intraweek to get updates.. I will try and post every night this week as I think the indicators will cement one way or another.
