Technical Watch Cumulative Charts

Cumulative Data
Week Ending 6/10/04

"Considering all that we have to deal with then, let's go for a neutral to soft market for Monday, Tuesday, and maybe into Wednesday (if open), and once things "settle down", a better attempt to rally on Thursday and into Friday where volume will be the key to whether we can finally follow through from what the end of May's initial breadth of market impulse suggests. Conversely, if we can't move though the zero line on the Summation Index next week, this could provide a "Summation Failure", and a retest of the price lows made at the end of May will probably be the near term result because of this."

Looks like we had a flip flop with Monday and Tuesday having the rally attempt which then led to Wednesday and Thursday's neutral to soft behavior going into the closure for the Reagan funeral on Friday...which was the historical expectation to begin with.

Not much changed with the advance/decline cumulative data which continues to maintain a constructive structure while retesting it's faster EMA's on Wednesday before bouncing higher on Thursday off or near these same "trend" lines. However, what we still need to see is the 10% index (20 day EMA) cross back above the 5% index (40 day EMA) to have a better foundation in which to rally more importantly. So here we have a neutral near term reading overall, though it should be noted that the NYSE cumulative breadth is now in this current configuration and should be respected for what it may suggest for the market overall.

The NYSE cumulative new highs/new lows joined the NASDAQ in generating a buy signal last week - adding additional evidence that the trend of money flow continues to be positive short term.

The NYSE breadth McClellan Summation Index - which measures the directional strength of the cumulative data on a intermediate term basis - generated a buy signal last Monday, though the COMPX and Total Market Summation's have not...but both are within a week or so of being able to do so if the monetary momentum of the current move continues.

We also generated a NYSE volume McClellan Summation Index buy signal on Wednesday after the COMPX accomplished this last Monday, and the Total Market joining the other two on Tuesday.

So though the trend of breadth continues to lead volume in the NYSE, the COMPX and the Total Market have set a better foundation with the trend of volume leading breadth which eventually leads the underlying price pattern in this money flow direction. It should also be noted that we have had nice run in these same Summation Index' so a pause would be expected fairly soon in their upward bias - especially since we are close to the zero line where hesitations, or even retests, do occur - so this would be something to look for by the end of next week.

It should also be duly noted that the market generated less than 4 point changes on the breadth NYSE, COMPX and Total Market McClellan Oscillator's on Thursday, so we should expect a dramatic move in the major market averages in the next two trading days.

In summary then, the trend of the initial impulse seen at the end of May, though not as strong, continues to be buoyant, and so being, let's give the nod to the bulls near term until proven otherwise. With past history showing an average 1 1/2% positive price performance after the burial of past president's (source: Ned Davis research), let's go for a positive Monday and then maybe into Tuesday - some consolidation or softness of the pattern on Wednesday into Thursday - with Friday a "toss up" dependent on what we've accomplished going into the end of the week - but where the start of a pullback wouldn't at all be surprising.

The above charts are courtesy of StockCharts.com

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