Thursday, July 7, 2011

Bollinger Band Stretch

Click on Chart to Enlarge

Both the Dow 30 and the Nasdaq 100 have now closed above their upper Bollinger bands on the daily chart for 5 straight days. Going back 15-20 years I can't find another instance of this on the charts (for either of them, not both together). Several with 4 days usually indicating a pullback or significant consolidation within days to a couple weeks.

So obviously the market is/has been very strong on this move, but it seems like statistically this trend has to rest significantly pretty soon.

As a side note, the kinda sorta breakout above resistance on AAPL today occurred on crappy volume (lower than yesterday and not high given average volume) and in an awful looking jagged base. Watch for this to fail, even (especially?) if it breaks to a new all time high. Watching this attempted breakout on AAPL may be the only indicator we need for the intermediate term outlook on the markets. A failed breakout here would bare minimum suggest a move below the low of this base in AAPL, and possibly a bull market high. As AAPL goes, so will the market in all likelihood.

Since I last posted a chart of AAPL showing accumulation vs distribution days, there have been 10 more distribution days and 5 accumulations days, keeping the ratio about 2 down to 1 up (33 distribution vs 17 accumulation). It would astound me if institutional buying comes in on this breakout, they have apparently been selling the whole base. I think they will hammer it down on this breakout again.

1 comment: