The chart above illustrates ST Price Momentum(blue) vs. S&P(yellow).
Note that during bear markets, the extremes in the ST price
momentum are exacerbated, while during the bull market from
2003 to 2007, the extremes were relatively subdued.
The ST Price Momentum, moreover, is pointing to an overbought
condition that is not sustainable, even for a bear market rally.
Click picture to enlarge.
5-Day Momentum. S&P = yellow.
Price Momentum = blue. Intraday behavior = pink.
For Friday (4/3) the Up/Down Indicator is .40 suggesting
a negative bias for the Stock Market.
The S&P interval = 5.75 points.
Tomorrow I will sell strength.
I expect the market to pull back for a day or two.
The momentum is strong enough to warrant caution for bearish
bets and I would not be surprised if the rally is extended for
a couple of more weeks.
6 comments:
this reminds me of what we've seen in the past few months, only down-side-up now
I noticed that the pink line went down on a very strong day yesterday. That is a rare event that I did not remember seeing on your charts. Any ideas what that means?
anon-
Really bad internals yesterday.
MarkM
Anonymous,
When the 6th day that is dropped is
greater than the last day that you add(to end with 5-days of data),
the result is a lower arithmetic average.
Will, thanks for the explanation. I was more thinking about the predictive power of this anomaly. BTW, would exponential average work better? I noticed lately that your indicator plainly doesn't work.
I like the PM chart. Is price momentum available from other charts or TA software?
Looks like we reached levels and patterns comparable to the end of 2002? So, maybe the next dip will be the bottom?
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