Tuesday, March 24, 2009

THE RALLY that wouldnt DIE ! !




Or is it the "Tale of Two Rallies"?

Either way it doesnt matter too much. At times there would seem to be a two tier market, one for the LARGE CAPS, and one for everyone else.

This matters NOT, as this Rally shows itself "ROLLING OVER", like a tall ship off the coast of Labrador in October, with so much ice forming in the rigging that it slowly heels over.

The TALKING HEADS are OOHHing and AHHHing about the strength of Monday's rally and how we have only given back a quarter of MONDAY's Advance. Good enuf. I wonder what they will be saying later this week? PRICE BOTTOMS AFTER BREADTH. That is a lesson well illustrated during the latter parts of 2008 and early 2009.

Now after a gander at the Exaggerated Momentum turn-about Chart[ GOLD COLOR ] at the 2nd from the top of the page, will indeed lead you to question the idea that this Rally is not correcting. Breadth-wise the correction has been underway for about FOUR sessions, despite yesterday's rally. Yesterday's Rally was in fact, the kind of fireworks that lend a smoke screen to what is actually going on.

If you use the above chart to gauge when turns REALLY occurred, it is apparent that although the rally APPEARED to TURN upward from March 6th on, the actual turn in BREADTH MOMENTUM occurred about Feb 23. BREADTH LEADS PRICE.
PRICE LAGS MOMENTUM. Its like observing a beautiful fireworks display while pickpockets are working the crowd, and suddenly you realized you've been robbed.

The time of that last UP-CYCLE from Valley to PEAK was 15 market days. Likely the decline as measured above will run from 10 to 20 market days.

If you are using free charts, on www.stockcharts.com, you can use: http://stockcharts.com/h-sc/ui?s=$NYAD&p=D&b=5&g=0&id=p48588850371
will create the TOP chart for you, so that you yourself can COUNT the days UP and DOWN and get a bit of a clearer picture of when things are actually moving, and which way.

In the next post I will steal a headline I liked from an email I got yesterday.

Good Luck All

DG

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