Tuesday, July 16, 2002
Notes for myself on the past week
13/14 Jul: Sat/Sun: Added minor forks to the NDX suggesting a rebound. Also noted a small upturn in the Accumulation/Distribution for the NDX, which while breaking a small steep downtrend line, is still below the longer term Acc/Dist downtrend line.
Added Monthly and weekly SML charts, both of which are confirming the grave weakness in this index. If it doesn't rally soon, it may in fact find fresh lows. At best, it may stay in conjestion until the Small Cap Season at the end of the year.
11Jul Thursday: The fresh lows won out and the SPX fork, after so many months was finally breached. Interestingly, the NDX has *relative* strength (as the SML continues to sell off). How long that will last is the question, particularly since the lower NDX fork has not yet been reached.
10Jul Wednesday: Goodness, the SPX lower fork finally got a touch! Without giving the rest of the TA much thought, perhaps a rebound *is* in the offing. Notice too how the small caps have continued to be weak, so maybe, just maybe, some of that cash is being put to work in the SPX big caps... I'm not wildly enthusiastic at this point as fresh lows can also signal the possibility of yet lower lows.
Interestingly, the The NDX has been strongish relative to the SPX...but this may not last. Today (Wednesday), MSFT did quite a bit of the work holding things from *really* moving down with conviction. One thought keeps recurring to me: tops are made in violence, bottoms are made in quiet. This sure feels more like topping action than not.
On the SPX, got the test, retest, fresh lows, and on a very strong down candle, which suggests that fork, which has been in place since MARCH, may itself be broken. Only the blue fork suggests a rebound, perhaps only to ~950 as a first target.
7Jul Sunday: While the NDX hit prior lows quite a bit early, the SPX (and INDU) had until recently, stayed aloof from that nasty action. The recent move to 944, however, is not likely to be a touch and go, but rather a test and retest, and IMO, a prelude to a fresh low, as indicated by the bold Andrews fork.
The last rally on the SML was extremely wimpy and further gains are increasingly less likely. Tuesday the index finally broke its Andrews support, opening the road to simple support lower below as the index corrects in tandem with the rest of the market.