Posted on 09/22/2014 3:37:19 PM PDT by BenLurkin
The yellow highlighted area in shows that the new all-time high set in the ETF at the end of last week was accompanied by contracting investor assets, which fell back below their moving average. This warns that a new monthly trend of contraction may be beginning.
The red highlighted areas show previous periods of contracting assets coincided with either flat or declining prices. These assets need to start expanding again -- and soon -- if there is indeed going to be more upcoming strength as suggested by Dow Theory. Without an expansion in assets, last week's rally is likely to fail.
Other obstacles include the Nasdaq 100's formidable overhead resistance looming just above at 4,147, the September 2000 high, and weakness in European stocks (see Aug. 25 Market Outlook ). Additionally, investor sentiment remains at historically bullish extremes (see Aug. 18 Market Outlook ), and seasonality data shows this is the historically weakest week of the third quarter (see July 14 Market Outlook ).
So, although last week's new closing high in the Dow industrials was indeed a good start, until the market is able to resolve some of these issues, I am not yet convinced there are blue skies ahead into year end.
(Excerpt) Read more at nasdaq.com ...
October is coming...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.