Setting Up for Final Charge Higher in Bear Market Bounce ~ The Risk Averse Alert

Wednesday, May 13, 2009

Setting Up for Final Charge Higher in Bear Market Bounce

There we go. Another day's beating suggesting top is in. And it was a beating ... registered technically on several fronts.

Yet inasmuch as today's breakdown in both the NYSE and NASDAQ McClellan Oscillators bolsters the likelihood the market is turning over, their sinking was notably extreme. This stands out particularly given how gains made since March '09 bottom scarcely have been retraced (contrast this to January '09).

This disparity (small index drop v. large McOsc drop) minimally suggests several days levitating might be in store. It also could be a fine setup for one final charge higher in the bear market bounce since March '09 bottom.


Coincidentally, the NYSE Composite Index is about the best performing of all major U.S. stock indexes. It alone has yet to violate its orthodox trend line from March bottom.

Although trend lines find no great usage in my brand of technical analysis ... here, given an RSI and MACD configuration "confirming" the rising trend line ... it appears technically reasonable to expect a bounce.

Yes, indeed ... a move back up, taking NYA closer to its 200-day moving average while RSI diverges ... could mark a very playable top. All the more if COMP continues lagging...


That bad boy is turning over. Price-RSI divergences at higher lows since early-April suggest NASDAQ's advance is weakening.

Still, the trend that's your friend since March bottom has NASDAQ bouncing when RSI approaches 50ish. So, look for this straight ahead.

Fast Money
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