Thursday, January 19, 2006

Momentum buy signal on the Daily charts

SPX and NDX gave a momentum buy signal on the daily charts. DOW is still on a momentum sell. Now the question is whether this divergences will resolve to the upside or downside. Based on how strong the RUT and SMH were today and the fact that the Mclellan Oscillators on the NYSE and Nasdaq crossed back above the zero line, odds are that the divergences will be resolved to the upside. We need to see a strong follow thru tommorow to keep the bullish case alive. Otherwise as i noted yesterday, the rising EMAs will start to flatten out, causing a potential trend change.

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