I keep looking for signs of a top, but don't really see any here. We do have a cluster of blue bars on the Elder impulse chart, but so far that is not signalling a trend change. If anything, the declining volume on the way down tells us we are in a bullish consolidation here. I can see us possibly pulling back to the middle pivot point, but anything more than that is going to take some pretty dramatic development, and by now the market has decided to totally ignore Europe. There is a potential problem developing, however: Oil. While it dropped a hair today, it is now in a new trading range, the top of which is unknown at this time, but if it is over 110, the market will not like it one bit.
Here is a somewhat bearish development: the price relative on the Nasdaq has reversed and is headed down. At this point it has not been long enough to say that this is a definite trend change, but if it doesn't start heading back up soon, we are going to be looking at a correction.
It is even worse on the Russell 2000, and this has also flashed us another Elder impulse sell signa. The last one was a false alarm: that does not guarantee that this one is. 833 is looking like a strong resistance point.
| Ticker | Relative Strength Index (14) |
| XLK | 77.38 |
| XLE | 72.8 |
| XLY | 68.65 |
| XLI | 65.2 |
| XLB | 63.35 |
| XLF | 59.4 |
| XLP | 56.98 |
| XLV | 54.44 |
| XLU | 50.74 |
Here are the sectors ranked by RSI. Not much has changed except for the rise of XLE.
XLK just got more overbought this week, and I really had to torture the chart to make the previous high the top of the trading range, which means it probably isn't.
XLU continues to be the laggard, now in last place for over a month. Price has gone up just a bit, but price relative continues to drop, This is about as bullish (for the rest of the market, not for this) as you can get.
We see some signs of weakness, but at best it means a minor pullback. Earnings season is winding down, which means there are going to be fewer catalysts for moves up (or down) and that leaves us at the mercy of the news. Judging by what oil and gold have been doing lately, I am not excpecting good news.
I will have the new highs update shortly.
