Sunday, May 31, 2009

Stock Market Update May 29, 2009

Here is a chart of the Dow 60 minute intra-day. Both the tick data indicator in blue and the bottom indicator the modified RSI looks to be topping. All of Friday's action took place in the last 15 to 20 minutes before the close.
This is a daily picture for the Dow. Notice the volume on Friday was down ... again. Personally I don't like this setup. If the market was truly strong ... wouldn't we see some confirmation in volume not just in price. I will make another point or two below.

This is a weekly chart of the Dow. Look back to 2004, 2005 and 2006 ... the Dow moved in about a 2,000 point range before breaking out in 2006. Is this going to be the case now for a few years? Has the Dow found its happy place and is just going to trade sideways for a few years. Unfortunately this is very possible. However, with the Frye indicator (green line) and the money flow (blue line) ... things look very toppy at this point ... I would not be adding new money unless we were to breakout above 9,100 on very strong daily and weekly volume. I want to see the big commercial money backing the rally.

Here is the culprit keeping the market from a correction. The US Dollar. I believe as long as the dollar remains weak ... its going to be difficult for the market to move down in price ... go back and review 2006 and 2007 as the dollar moved down in value the market continued to rally while inflating commodity prices.

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