|Subtle Bearish Intermarket Divergences Noted in Equities after Yet Another Greece Flare Up|
|Friday, 19 March 2010 14:26|
Yes, the Dow Jones, the Johnny-come-lately to the party gave a new highs on the year, and closed on the highs of the day. The Dow Jones did a nice job of dismissing new concerns in the Eurozone surrounding Greece, and was buoyed by a better than expected Philly Fed today.
The much broader Russell 2000 also set new highs on the year, but closed in the bottom half of its daily range. And neither the SP500 nor Nasdaq took out the highs they set on Wednesday. These are subtleties that suggest some digestion of the recent gains might be in order in the coming week. The notion of a digestive trade would be consistent with forecasts of bearish inputs from a few economic reports next week, along with new uncertainties and instabilities in the EU zone.
The Dow Jones 120 minute chart suggests that a short term high might be set on Friday March 19, and that a digestive trade off a March 19 high would correlate with the digestive trade following the high of Friday Feb 19. A short term low was set on Thursday Feb 25s jobless claims. Another short term tradable low would be ideal if set on Thursday March 25’s jobless claims after existing and new home sales earlier in the week.
The stock market will not necessarily show much if any weakness ahead of Tuesday’s existing home sales report, especially if any valid reassurances about Greece’s fate were made from Germany by Germany. All indications from today’s headlines imply the Germans are not going to budge on the no-bailout clause. That said, the stock indexes could hover on Friday and Monday, in a manner similar to Friday Feb 19 and Monday Feb 22 on the chart above.
The SP500 is showing that it could set an overnight high around 5.30 pm or 6.30 pm or shortly after the Asian markets begin trading. Price-wise, one might expect a 6 to 8 point bounce off today’s intraday low might turn the mkt south again, consistent with the prior two 6 to 8 point bounces. Such a bounce implies the SP500 should peak around 1162-1164 and not breach last nights 6.30 pm high at 1164. The Europeans have been buyers on Tuesday and on Thursday at 3 am in the morning, but that may not happen if the news surrounding Greece keeps a lid on price advances.
}Georgia Anderson` Financial News Network, trader, trader education, online forex, daytrader,forex currency, forex software, investors, forex trading, forex.
Written by :