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Thursday, February 14, 2008


still pointing positive

emotionally, i'm nervous as hell. but here's the rational side of things, near as i can discern them.

first the nasdaq 100. new lows and highs less lows show a really positive retest of the january 22/23 low. issues near new highs are leading price as well, although actual new highs haven't broken out. this is a good-looking picture of a retest.

i've been messing around with dr. steenbarger's ideas about volatility envelopes, which i consider a really interesting idea. so far, the indicator looks very useful -- and straightforwardly bullish.

the net points, issues and volumes give some pause -- they could be indicating more dowside left to come. but there's more evidence still here of increasing participation as issues over 30dma is leading price. mcclellan oscillator also looks really good, with the summation coming off a very low level. note too that february 13 was a 90% upside day in the nasdaq 100 by my data -- things are looking up here.

nwo the s&p. less bullish, more tepid. no real outstanding divergences, except possibly near-highs leading price. but no outstanding bearish signs either.

this looks more positive, though one cna argue from here that the divergence in supply is very short (two days, january 22 and 23) and insuficient. but supply improved considerably on the turn down to 1320, even though that wasn't a proper retest.

because of the shallowness of the 1320 "test", volumes of all stripes are at least mediocre -- no leading divergences, but no breakdowns short-term. no 90% days either. but participation again is growing and the oscillator looks bullish.

sentiment, as previously noted, is about as bollocks up as could be by many measures. equity put/call closed over the magical 1.0 level tonight. the 10-day average of the ISEE all securities is a putrescent 93 -- a level seen around tradable bear market lows (january 22/23, also august 15 2007 and march 14 2007, but then back to mid-august and mid-october 2002). this headline from traders narrative captures the mood, i think. it disturbs me that jim cramer is pointing it out, but it is what it is. this looks like fertile ground for a continuing rally.


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