Hi Everyone
(Please note the OVI charts are Monday’s as Tuesday’s are still being calculated as I write this note)
Well the Double Bottom held and we’ve seen strong action on the main indices as they bounced off those recent support levels from last week.
The Dow is up 650 points in a week and the S&P up over 65 points. Both have broken through recent resistance. The Dow’s OVI has crept into positive territory, while yesterday’s S&P OVI was hovering just below neutral. It’s likely to be above zero tomorrow morning.
Dow (DIA) OVI
S&P (SPY) OVI
The Nasdaq, which I have come to watch very closely, has not broken through previous resistance yet, but it’s getting very close. A break of resistance would signify a buy, though with tight stops. The fact that the Nasdaq is lagging the Dow and S&P, to my mind is significant.
Nasdaq (QQQQ) OVI
We like to trade breakouts from consolidation patterns. With a few days of rest, the markets could set up nicely for a short term continuation of this rally. Long term though, I’m still bearish. The financial stocks are often a bellwether of market sentiment. Currently GS is forming a bear flag, though today was a positive day and it’s due a bounce. A break of the current bear flag low would be bearish, but I’m not expecting it too soon.
GS OVI
In summary, we were due a bounce and we’re getting it. Right now the sentiment doesn’t quite trust it, and nor do I. I don’t think we’ve seen the lows of this year yet, but this bounce should give us more opportunities. In the short term we could get a few bull flags to go long with, and in the medium term we’ll have some nice bearish patterns to get back into.
All the best
Guy
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