Wednesday, March 01, 2006

Don't short a high TRIN day !

When the market is already downtrending and the TRIN goes high, it's indicative of a washout or climactic kind of downmove to come. When the market is at the highs or making new highs and we get a high TRIN day, it's indicative of VST panic, typically induced by fundamental events and a buying opportunity for those believe in the trend. Yesterday we had a NYSE TRIN of 2.2, barely a day after making new recovery highs. That's a tough market to short in my opinion.

Like a broken record i have been saying over the past week that the market is an yellow zone, where it's vulnerable to bear attacks and that's precisely what happened yesterday - GOOG news induced panic selling. The NYSE MCO dipped below zero which caused some excitement among the bears. As i have been saying, as long as the MCO 5% and 10% components are comfortably above the zero line, a temporary dip by the MCO below the zero line is a non-event. It appears that the weak hands have been flushed now and the market appears to move higher.


























One of my trusted indicators (MACD), which i have been discussing over the last week for a potential triple divergence sell, curled down yesterday, but did not generate a crossover. Today it appears we had a backkiss on this indicator. So if the market consolidates over the next day or two and blasts higher, the MACD will blast thru the declining tops line on the MACD, in which case look out above.

My system remains on a buy signal since 2/14/06. The hourly which had turned down yesterday, has turned back up today. Bottomline, i will continue to buy the dips on the hourly charts, until the daily turns down.

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