Becoming more overbought

Due for a pause in the action

Yesterday I wrote that I expected a pullback today.  That did not happen and the market decided to push a bit higher.  While that may seem like a good thing, it just pushed us further into overbought territory.  The RumWave is still suggesting there is more upside, but I think we will see a little snap back before moving to new highs.

The daily scores above show some solid pushes into orange-red territory.  The internal components that make up the 4 hr and Daily scores also displayed several "red" numbers.  

On the 4 hr chart above I have highlighted a bearish divergence between the higher highs on the candlesticks and the lower highs on the RSI (yellow lines).  This is a signal that a pullback is probably just around the corner.

 The slow stochastic on the daily chart above is at 91.8.  This is a high number.  It usually doesn't go much higher before turning down.

Overall, I am still holding my long positions.  I expect a pullback, but the RumWave is not producing a sell signal so I will wait until then to take profits.

GOOD LUCK TOMORROW!

Pause or pullback likely

Pause or pullback is probable, but nothing to be worried about

The calculated scores for today indicate a pullback is likely tomorrow.  The 4 hr chart score is very high, however the RumWave shows a positive trend through at least mid August.  I am continuing to Hold my 

bullish positions.

The 4 hr chart (above) slow stochastic is at overbought levels.  It will probably move back down a bit.  Of note, the RSI is displaying a bit of a bearish divergence.

 The Daily chart (above) also shows us to be at high slow stochastic levels.  I think a little give-back may be in order.  We may have seen the start of it in the last 30 minutes of trading today when the market gave up steam drooping from +70ish to +20ish.

GOOD LUCK TOMORROW!

Continuing Higher

Strong bullish showing Friday!

Friday's action was great for those that were long (make money if the market goes up).  The RumWave has been suggesting a bullish run and continues to favor further moves to the upside throughout the first half of August.  I will continue to hold my 3x DJIA ETF until the RumWave produces a sell signal.

 There wasn't as much cooling of the calculated scores (above) on the 4 hr / Daily chart as I would have liked.  Frankly I was a little surprised that the market chose Friday to run up.  But that is why I rely on the RumWave to tell me which way the market will probably go over a longer period (10-20 days).  The predictability of that time period in my backtesting (as far back as 2005) is far, far more stable than trying to call daily market direction.

DJIA 4 hr Chart

 The 4 hr chart (above) is still encouraging from a bullish standpoint.  The %B and Slow Stochastic are not at extreme levels, which I interpret as bullish.

DJIA Daily Chart

The Daily chart (above) also has some high oscillator readings, but they are not extreme yet.  On a strong bullish run, it is not unusual to see the oscillators stay at relatively high levels for the entirety of the wave.

GOOD LUCK NEXT WEEK!

Bittersweet

Just like we called it

For the last several days I've been calling this pullback based on the calculated scores below.  This system is turning out to be very accurate.  Overall, the RumWave still calls for more upside through the first half of August.  Tonight I have two "lights" displayed (above).  RumWavers that already bought into this rally should hold their positions.  Those that missed the buying opportunity are presented with another opportunity here.  



 The calculated scores (one of my two proprietary market analysis tools) show some cooling today in the 4 hr chart score.  I think we could see another day of consolidation (read decline) tomorrow before the rally resumes in a substantial way.

DJIA 4hr Chart (with Fib Retracement)

For tonight's 4 hr chart (above) I drew a Fibonacci Retracement of this last minor wave.  Today we bounced off the 61.8% level.  I interpret this as a bullish sign.  Also note that the RSI bounced off it's lower levels.  It could jump back down again, but overall it is pretty low.  The Slow Stochastic is also showing signs that this decline could end relatively soon.

DJIA Daily Chart

 The Daily chart (above) is not quite as encouraging, and suggests there is still a little more donwside possibility.  This correlates with the daily scores to suggest there is probably one more down day.  Then, we will resume the uptrend, probably Monday.  Maybe some good words out of Europe over the weekend??

GOOD LUCK TOMORROW!

Down with ECB? Yeah you know me.

Markets await ECB news

As expected the US Fed did not deliver additional easing measures.  Tomorrow we get news from Mario Draghi and the ECB about what measures are going to be taken.  The market is still poised for a little snap down, but my gut feeling is that they will come through with a strong set of countermeasures to their current issues.  We will know soon enough!

 The proprietary daily scores are still showing a solid red score for the 4 hr chart.  There were not any "red" returns on the internal numbers again today, so that is a good sign that the market could go higher with positive ECB news.

DJIA 4hr Chart

The 4 hr chart slow stochastic is showing a crossing point on the red and purple lines.  What I do like is that the red line has cooled off a bit.  It could move back up from here if we had good headlines.

DJIA Daily Chart

 The daily chart is still showing some room to decline on the slow stochastic and the RSI.  It could go either way, but the RumWave is still showing some very bullish projections about the next 10 or so days.

GOOD LUCK TOMORROW!

An orderly pullback

Not too bad so far

For now, we have seen a gentle pullback leading into the Fed / ECB news over the next two days.  That bodes well for the market.  It tells me that we are not going completely crazy over anticipated QE, and that there is a little caution in the air.  The internal numbers of the calculated scores below came down off the "red" ranges, but the overall scores are still pretty high.  I still think we could drop 100 pts in a heartbeat with the right headline.... something to the effect of.. "Fed fails to deliver anticipated QE".

The first red candle showed up today.  Notice the slope of the candles from the last wave.  It has been my experience that the greater the slope is going up, the greater the slope is going down.  It looks like we would meet resistance (top of the last wave) in the vicinity of 12900, so I would not be surprised to see it drop a little below that and then claw back up to close above that resistance level.

The daily candlesticks have taken on the "twisted ribbon" appearance that signals an end to the momentum.  I've seen the market break both higher and lower from this point in the past.  The slow stochastic would indicate that there is less resistance to the downside over the next couple days, so that is what I think will happen.

If it does drop a bit, I won't be in a panic because the RumWave tells me that we will continue higher and this is just a brief (and necessary) pause in the action.  

GOOD LUCK TOMORROW!

Pullback is in order

Pullback needed

Today's action was a non-event.  Everyone is just waiting to see what happens with the Fed and ECB this week.  A speculative rally might hit tomorrow, but that will send the daily scores into the red.  Below we can see how the 4 hr score is at the point at which it has traditionally pulled back.

The 4 hr candlesticks are showing some signs of consolidation.  The Slow Stochastic, %B, and RSI all favor a temporary decline.

For the daily chart above, I changed the candlesticks to a traditional depiction versus the Heikin Ashi ones I usually post.  I changed it today to display what may be a tweezers top.  Such a signal would indicate a trend reversal.

Overall, I will keep my positions where they are.  There is the slight chance of an ECB inspired push to ridiculously overbought levels and the RumWave is still showing a positive trend for the next week or two.

Best of luck tomorrow!