Wednesday, January 4, 2012

Indicator Update

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Not much time for comment here.  But the daily stochastics did NOT confirm a sell signal recently.  However, as of today there is now mild bearish divergence on the daily stochastics, and the markets are at significant horizontal resistance.  So I'll be interested to see what the smart money does this week.  If they sell this rally, then it may be a sign that it will get turned back.

The total put/call ratio dropped to its lowest level since July a few days before the market peaked and then tanked.  It is at levels that have marked imminent highs since last February.  So IF the market is still in a bearish trend, then it should be making a high soon.

The equity put call ratio is giving a picture perfect short trade set-up here.  The longer term put/call currents are in bear market mode, and the short term has just fallen below the longer term currents. This is just a set-up, but any indicator could be used as an entry signal short if a valid signal comes soon here.

If this is a bullish breakout move, then the pattern would imply substantial strength ahead.  From a pattern perspective, a bullish market should absolutely NOT break below December's low.  If it does, then we have probably seen a significant high.