Technical Watch Cumulative Charts

Cumulative Data
Week Ending 5/21/04

"The bottom line this week is that we are at a key near term juncture, where a close below the price 200 day EMA's should be expected in the next couple of days, but from where we will probably see some firmness, if not close higher on the week when all is said and done. Watching indicators such as the daily TRIN and the various volatility and sentiment indicators (like the VIX and put/call ratios) should provide enough evidence of whether a short term bottom is in, or a test of last fall's lows will be the new price objective over the next several weeks."

Well, except for the weekly highs, we pretty much got everything one would need and want for a key price bottom to now be considered.

The near term problem for the market is with the NYSE cumulative breadth presently leading the volume to the upside, and unless this rights itself in the next day or two, we're probably going to have one more price test to come by the end of next week to correct this imbalance (this is also the reason why we had several rally failures over the past week - little buying volume, or conviction, for the price). However, if this type of correction were to occur, this would actually make a better internal bottom as we could possibly get the COMPX and AMEX volume charts to peak below their 1% trends (the 200 day EMA) for a day or so to get the faster moving averages to move closer to this same EMA for a better technical foundation in which price can then rally from.

The additional good news for the bulls this week is with the cumulative new highs/new lows which are now starting to slope upward after just breaking below their faster EMA's two weeks ago. A move back above these same "trend" lines, would provide additional evidence that we do have a key price low behind us.

The cumulative TICK and TICKQ charts (not shown) are both looking constructive once again, with the TICK actually at new highs for the move of the last four years. The TICKQ, though not at new highs as yet, has also turned up, and is within striking distance of joining the TICK in this area.

So, it would seem that this "key juncture" will continue for another week, with a sharp sell off in the beginning of the week and then further firmness going into the holiday weekend the preferred forecast for the near term, but do keep in mind that just about all of the necessary corrective work has already been done where the market could turn up at any time.

The above charts are courtesy of StockCharts.com

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