Let's pull out to NDX monthly. This is the big test for bulls going forward. The 10 monthly MA sits at 1630 along with the 200 dma. We closed two points above and that is very good news. It is now critical for bulls to hold this level. There is no strong reason to think they won't, but the SOX needs to join the "above 200 DMA" party. The media keeps saying the advance is broad based along with the semis, but they obviously have not looked at a chart of SMH or the SOX. The relative performance is what counts, not the fact that it just went up. I know I keep rehashing that story, but unless something has changed from 15 years of NDX history, I will take notice.
It's the same for the TRAN (Transportation index). That one also sits below its 200 DMA. I hope the bulls pull it off, so far so good, but set your alarms at NDX 1630.
Overall, I think hedge funds are chasing performance while they still can, i.e before earnings and the election. ES has monthly R2 sitting right at 1350, which would be about SPX 1340. If ES 1320 holds (and it must), they will certainly shoot for it. Conspiracy theorist would add that "they" will try to keep equities up and oil down until the elections. Call it the Bernanke Put.
This entry was posted
on Saturday, September 16, 2006 at 12:04 PM.
