Monday, October 24, 2005


Here is an updated hourly chart of pit trading in the December S&P futures. Above this post you will also see a daily chart of the number of advancing issues on the New York Stock exchange.

At the moment the number of advancing issues today is higher than for any day in the past six weeks. You can also see a succession of upward ziz-zags in the daily numbers. Together with the obvious upturn in the 10 day moving average of this indicator we have a very bullish picture developing.

Even so, you can also see that the market has stalled at a top below the last top of 1200.80 and below the 1/2 point of the current box at 1202. This makes me think that it will drop to 1159 before a sustained rally starts. Such a drop would almost certainly setup a strong bullish divergence between price and the advancing issues indicator and this, together with the extreme bearishness by short term traders would set the stage for the rally to 1350 that I am expecting.

If the market just goes straight up from here (contrary to my expectation) the advancing issues numbers will be telling us that the low at 1172 on October 13 ended the drop from 1250 and that the rally to 1350 has already begun.

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