After pulling back off resistance yesterday, it was expected we woiuld pull back today, and we did, but not much. Today was just weak enough on the SPX to give us a blue candle on the Elder impulse chart, which at this point means very little. The 1292-1296 area is drawing the market in as it attempts to build up some momentum to get through it, and so far it looks like it has a pretty good chance,ATR continues to drop, CMF continues to rise, and RSI is nowhere near overbought.
The Nasdaq is starting to look even better. Price relative is in the process of reversing, and if it gets through the horizontal line I drew, I would call it a new up trend. The Elder impulse bar is still green here, so we are not in imminent danger of a major reversal. At most I would expect a very mild pullback.
The Russell 2000 is now getting back into the act. It is near a breakout past the October high and price relative is also near a breakout. If it succeeds, we may be in for a longer rally than I expected.
| Ticker | Relative Strength Index (14) |
| XLV | 67.69 |
| XLI | 67.23 |
| XLB | 66.31 |
| XLF | 66.2 |
| XLY | 64.41 |
| XLK | 58.77 |
| XLP | 54.3 |
| XLE | 53.44 |
| XLU | 48.14 |
Here are the sector ETFs ranked by RSI. XLB has made a move up in the last few days, and XLE is surprisingly weak, but iother than that there aren't nay surprises here.
XLV is still leading, but it looks like it might not be next week, especially if the market continues to rally. The price realtive line is trending slightly down, as you would expect in an up trending market, and another week of that should send one of the more growth oriented sectors (such as XLK or XLY) to move up.
XLU is still in last place after moving from leader to laggard in one day on the first day of this month. It hasn't dropped much since, but the price relative line is dropping, and it is pretty clear the big money boys have dropped this like a hot potato.
Despite being at a critical resistance level, the overall tone of the market is still bullish. I can't tell how long it will last or how far it will go, but until something changes, you have to go with it. The worst parts of the market are the ones getting the bid currently, which probably means we are in the late stages of the rally that began October 4.
I will have the new highs update shortly.
