06.02.2011 --- Mixed Signals

Obviously we are somewhat oversold here. The DOW is the most oversold, while the S&P and Russel 2000 do have some room. But oversold can always become more oversold. So that alone is never a reason to abandon a position or try to catch a falling knife in a bear move.

Not a whole lot changed from yesterday.

The DOW held the 100 today. Which is symbolically and psychologically important, but not super important because the DOW is only 30 stocks. The DOW though looks the most oversold and after holding the 100, looks the most ready for a bounce here;

The S&P on the 7 month daily chart looks to have broken and closed under the 100dma. Now, I don't know about you, but I think 500 stocks are more important than 30 stocks. So we have a mixed signal here;

On a shorter term basis, we appear to have closed just under some resistance in the middle of the channel. We could either take that out and head to the top tomorrow, or we could finish and head to the bottom. So short term is a 50/50 call here, not much better than roulette;

Not much changed for the Russel 2000 or XLF. Russel is still holding support and is still above the 100dma. The XLF is still floating around in no mans land below all moving averages.

What the bears really want here is for the Russel, S&P and DOW to all take out the 100, and then give the 50 and 100 some time to roll over and start heading south. We have a lot of ground to cover to converge the 50 and 100 with the 200 and we need the 50 to cross the 200 to get the dreaded death cross.

But one step at a time...

GL

CJ