A Different Green Acres and the Same Arnold ~ The Risk Averse Alert

Wednesday, December 17, 2008

A Different Green Acres and the Same Arnold

Last week, I presented a chart of the NYSE McClellan Oscillator in an effort to deliver bad news to bears. Despite last week's modest pullback the oscillator remains positively positioned, showing no sign of underlying, internal weakness typical of a market about to head south.

Today, I give you the NASDAQ McClellan Oscillator, submitting that the market's counter-trend rally during the July-August '08 period might offer perspective on similar, near-term prospects...

NASDAQ McClellan

Of course, the current similarity could be destroyed in a day. Likewise, there's nothing saying the market can't trade sideways for another couple weeks (much as did the NASDAQ Composite going into early August) before exploding higher.

Despite being hopeful the market's anticipated surge would occur before Friday's options expiration — those who received my Trade Notification on November 17th know why — I nevertheless find every reason to remain optimistic.

NYSE 5-min
NASDAQ 5-min

We see 5-minute RSI did a little more today than simply come into balance, as I had suggested yesterday likely would be the case ... following its ["irrational"] buy-side surge on news the Fed was committed to destroying the exchange-rate value of the U.S. dollar. Indeed, we might conclude RSI markedly weakened.

So, it appears Thursday's trade might be soft ... at least at the start. Chances are, however, this won't last. Best guess is support holds, the market turns around, and trades higher than today...

(... and how Alexander Hamilton would pay for infrastructure projects)

Fast Money
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