We are on the road to 1292, the next major source of resistance, but we don't seem to be in any hurry to get there. Once again we reversed an early move down to finish marginally up on the day, great for day traders but not much happening for the longer term guys. We do have a few potentially bullish situations here: ATR has dropped to a very long term low (that can be a double edged sword: it could also mean a reversal is coming soon), a rising CMF, and it appears we are forming a bullish wedge here (I think it is bullish, I will have to consult Bulkowski's book when I get the chance). However, the fact that we can't seem to make much headway here is not very bullish, and I am still expecting a pretty substantial drop sometime this month.
The price relative on the Nasdaq, which had been threatening to fall into the abyss, has stabilised and is showing some signs of reversal, Some, but not enough for me to have confidence that it has reversed. On the plus side, it has finally passed the December high (barely).
The Dow industrials has finally started to under perform, which, as I have pointed out numerous times, is bullish for the market. The only trouble is it is not under performing by much.
The Russell 2000 continues to essentially flat line on price relative, which doesn't help us any. While it probably doesn't mean much, the CMF of the IWM is not rising as fast as the SPX (I hate using ETFs as proxies, but the Russell chart does not have volume).
The weak early January rally continues, much weaker than I expected it to be. We have been sputtering around waiting for something. Thta something is probably earnings, which will start coming out this week., If last quarter's trend continues, we might see a pretty nasty drop later this month or early next.
I will have the new highs update shortly.
