In terms of the momentum models, A and B, momentum is generally rising though the "A" model has not made a higher high and the "B" model has leveled off for the most part since late September. This argues that with the leveling in gains, that the speculators are pairing back in this index. IN terms of the Oscillator, the index is close to the April highs in terms of momentum but given the slowdown lately, this sort of overbought state is unwinding some which in the grand scheme of things is bullish for the overall long term uptrend in the index. In regards to the Power and Force end of this index, the model remains solidly bullish even with the breaks of the trend moving average since early June. Lastly, in relation to the S&P 500, the index broke out above resistance in September only to back off as the S&P charged higher through the end of October. This argues that risk taking is falling which happens to be inline with my overall market model which showed a drop in risk taking as well (though a bounce back on Friday to the primary trend).
So overall this model is bullish as the volume confirms the uptrend and momentum models are both bullish at the moment. The fact that momentum A is still lower than the level in the spring bothers me a bit but given the strnegth of momentum B, the overall structure is still higher. The oscillator should unwind with this continued sideways action but if the GOP takes the house and the senate, you can bet the outperformance will pick up in the index versus the S&P and push the oscillator to overbought.
From a trading standpoint, I would probably be a buyer on further consolidation in the index. Ideally the index would backtrack to the trend MA of its relative performance with the S&P and then turn higher. That would give me the greenlight to add to microcap positions and look for a challenge of the previous years highs.
No comments:
Post a Comment