Friday, November 30, 2007

Case for an IT bottom

On 11/7 after breaking below my SPX 1480 IT pivot, we had entered a IT downtrend. Now the SPX 1480 has been captured on a weekly closing basis. Coincident with the price close, all my daily and weekly indicators have turned up and based on my weekly indicators i have a IT buy signal at today's close. The daily and weekly are both turning up at the same time, which makes it a combo buy signal, which tend to be powerful signals. Since i cannot fully disclose my system and its rules, here are a few charts to make a case for an IT buy signal.

On the daily charts, this slow MACD has issued a buy signal at the close today.

On the Daily charts, we are coming out of an oversold area, based on this oversold/overbought indicator.

On the weekly charts, the CCI crossed over above -100. We had a nice outside reversal day on the weekly charts. XLF, the beaten down financial sector also had a outside reversal day on the weekly charts.

The NYSE MCO had a nice breadth thrust and the summation is now pointing up. Also note the positive MCO divergences with Aug 07 lows.

Lastly, the 10 day SMA of adv-decl made a nice divergent bottom relative to Aug 07 lows and has now moved above zero.

Now the perversity of the markets should show up it's face next week. I am sure a lot of newsletter writers will be issuing buy signals to their subscribers today. How do you unload all the newly minted bulls ? - Good old stlye shakeout. After a day or two of move to the upside next week, we should see a good sized shakeout after which the IT uptrend should continue. I would expect SPX 1460 to hold on any shakeout/pullback.