Phantasmix Stock Market Blog

The market is overbought and here’s my case —

Click charts to enlarge

$SPX

Retraced nearly 100%

XLF

Looks good. Low-volume week and WFC pre-announcement manipulation or not, the fact is the pattern I was watching played out as expected. Possible scenarios:
- fills the gap and goes back up
- consolidates just above new support level, this would be the proper behavior for a high volume breakout

U.S. Dollar Index

Despite bullish patterns that worked out on the financials and SPX (and XLU and probably some other indices), oddly enough the U.S. dollar is showing the same pattern. Should it break out, this rally may die. $US is a factor that may work against the continuation of the move up. It’s one of those things that works, until it doesn’t.

$S&P 500 Stocks Above 50-Day Moving Average

Seriously overextended, must correct

$NDXA50 Nasdaq 100 Stocks Above 50-Day Moving Average

Same here

QID

On long-term support here

SDS

Same here, though it can still go lower, to yet another long-term support level

S&P 500 ($SPX)

2-year weekly chart of S&P 500 index
Getting overbought, so we can probably expect some weakness in the next week or two. Vertical lines show previous times when weekly RSI(3) was in overbought territory and slanted lines show market softening as a result.
I think those will be buyable dips, unless the U.S. dollar strengthens.

$VIX

Daily chart of the Volatility Index
Broke down (but still sort of at support if you draw a horizontal line)

XLF

Financials ETF daily chart
While it’s overbought, the question is — do you want to mess with the government? Besides, the sector is coming out of a severely oversold condition (85% drop!)

Have a good weekend, you.

I’m Ursa Minor at the moment and if there’s a pop in the morning, I’ll go full bear.

Here are some charts to back up my stance.

Click to enlarge

Summation Index

Heading south

New Lows

As you see, it usually reverts to the mean. This chart is for NASDAQ; NYLOW looks about the same.

BKX – Bank Index

Overbought. You might think that the banks were very oversold, but what has changed to warrant further advances? Nothing. I say this is enough. Technical pressure relief played out.

$US – US Dollar

Dollar looks like it may try getting above resistance? Not sure, the candle is black, so maybe it’ll revisit the support area first.

Sleeping Bear

Join me? Or are you a bull?

Have a profitable day!