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Back at The Top January 29, 2016

Posted by Tom in Thoughts.
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We had a good week this week, especially on Friday with the help of the Bank of Japan (their attempt to add liquidity to the market via negative interest rates; this is not what strong economies do).  But before we get too carried away here we need to remember that we’re right back up to the upper range of the trading range.  The question next week is whether this rally can hold, and better yet, expand.

NASDAQ

Note on the chart the last time we rallied up to this level it went right back down.  The big difference was this Friday we had higher volume.  My Sentiment indicator has now moved into neutral territory and my (not shown) trend model is also neutral.  The Accumulation volume has picked up but still has a lot of catching up to do to repair the damage during the January sell off.

Bottom line is the latest rally is hopeful, but not proven.  One reason to be skeptical is the big up moves in Emerging Market countries.  I don’t see why Brazil (and others) have all of a sudden solved their major economic problems last week.  Oil has recovered but most traders believe that this was a short covering rally and likely won’t hold.  We’ll see.

Top 20 Sectors

Major sectors are somewhat defensive (utilities, consumer products, real estate) and the tech sector ones do not have strong Accumulation grades.  Rarely are bottoms “V” shaped so I’d like to see just few more days of positive price and volume action before  carefully putting cash to work.  Breaking that downward sloping red trend line would be another positive.  Leadership in technology and financials would be nice to see as well.

Have a good week and watch what happens as we hit this top resistance area.  It should be interesting.   ……..  Tom  ……..

Chart by MetaStock; table by http://www.HighGrowStock.com. Used with permission.

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