Was It Top or Is It Topping? ~ The Risk Averse Alert

Friday, September 25, 2009

Was It Top or Is It Topping?

Moving from prior days' perspective viewing stock market history over the past forty-to-one-hundred-plus years let's consider how this week's trading, seen minute by minute following Federal Reserve confirmation that, yep, the financial system still is dead, supports the probability top to the counter-trend rally off March '09 bottom is in.

NYSE 1-min

Comments on the above NYSE Composite chart summarizing each day, Wednesday through Friday, indicate why, with each day building upon the previous, further selling likely lies ahead.


Momentum's negative turn (see MACD) likewise supports the case for further selling straight ahead, although a brief period of sideways trading might precede this, too, much as today is seen.

Further confirming this view projecting more selling yet to come is Thursday's volume increase over Wednesday's, as well as today's, "consolidation-like," volume contraction.

This, however, is about as far as one really ought be willing to go with one's belief top might be in. Given underlying technical conditions still positioned on the buy-side of respective balances — and we have seen this for many months now, despite persistent deterioration — there's no point pounding the table when Elliott wave-related considerations allow still higher highs in the formation of the present counter-trend rally off March '09 bottom.

Fast Money
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