Stock Market Momentum Fading ~ The Risk Averse Alert

Wednesday, May 20, 2009

Stock Market Momentum Fading

My "top is in," Elliott Wave view maintains its credibility by the slightest margin!

Contrarily, wider latitude should be afforded a bearish outlook whose conclusion about May 8th top is, "Whatever." Truth is even if this peak is exceeded, the market probably will remain positioned for a decided turn lower soon enough...

NYSE McClellan

Seeing instances over the past year when the McClellan Oscillator similarly was weakening, you get a sense of odds right now the market might come under some pressure.

Of course, there's nothing set in stone dictating things will play out largely like the past. Indeed, you might view the NYSE McClellan Oscillator's similar behavior to September '08 and fear another round of steep selling presently might be in store.

However, what of the NYSE Composite's much improved tenor now versus July - September '08? Better not ignore this. In fact, this week's trading seems to be driving home the point.

NYSE 5-min

So, about that "c" wave beginning late, last Friday ... the one "showing no clear sign of quitting until ... [yesterday's] last hour" ... it went into overtime this morning and then faded like Dylan Ratigan.

Let's forget about the fact today's launch out of the gate might change the Elliott Wave count from May 8th top...

(You see why I try to keep this sort of thing to a minimum. It seems more productive speaking broadly within the realm of finite Elliott Wave possibilities rather than unduly promoting one alternative over others.)

This week's comeback simply fits the entire move up from March '09 bottom.


How might we best characterize the drive higher off bottom? No doubt, both RSI and MACD reveal the NYSE Composite's trend bias continues to the upside. Both measures of underlying strength remain on the buy-side of their respective ranges. Likewise, both have confirmed NYA's advance every step of the way.

Still, both measures are turning over. Yet why is this more significant now than was the case in April when both were likewise doing the same?

Go back and let the McClellan Oscillator tell you. Momentum is fading...

Fast Money
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