Saturday, September 8, 2012

The Market-Disciplined Investing Sept 8


This week, the indices (DJIA 13306, S&P 1437) closed within their intermediate term uptrends [12316-17316, 1298-1878]. But as you know, the big technical event was the S&P punching through the upper boundary of its short term trading range (1266-1422) on Thursday followed by similar action in the Dow on Friday [12022-13302]. This activated our time and distance discipline on both; and at Friday’s close, the S&P has been above the 1422 resistance level for two days, the DJIA one day. In the absence of any retracement, the breaks will be confirmed at the close Tuesday/Wednesday.

This leaves me sitting on my hands awaiting confirmation of this potential break but still somewhat doubtful that it will succeed based on continuing negative readings in a number of breadth indicators including the flow of funds, on balance volume and our own internal indicator.