Market Update

By: J.D. Rosendahl | Thu, Mar 11, 2010
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Last week, I wrote about the break out in the Russell 2000 and the inverse head and shoulder patterns in the SP500 and the NYSE.

Below is the daily chart of the SP500. Both the RSI and MACD suggest a little more upside in this move, which should help the index to a new high.

I'm looking for the SP500 to make a new high with yet another bearish divergence on the MACD. So, that's something I'll be watching closely in the next couple weeks. The inverse head and shoulder's pattern calls for a target of around 1160-70.

Below is the weekly chart of the SP500. It looks like the weekly MACD is in a topping process. So, I'll be watching for the weekly MACD to top out at the very time the daily MACD creates another bearish divergence. If so, we should expect another leg down beginning afterwards.

One of the markets I've also been watching is the junk bond market, which I use the JNK. The daily chart is below. You'll notice the JNK has matched the stock market moving higher, which leads me to believe as long as the high yield market is buoyant, so should the stock market. What I'm looking for is a bearish divergence on the RSI, which seems to be forming, and another divergence on the MACD leading another leg down.

Below is the daily chart of the DJ30. If we are going to get the SP500 to grind higher, then I'm going to expect the DJ30 to catch up and make another high too. I also expect to see MACD divergences like the other markets.

The above views are my primary view of the markets, and I'll be watching for those divergences for confirmation. For those of you who like to keep an eye on Fibonacci numbers and ratios, the end of March early April is the 13th month of the run up!



Author: J.D. Rosendahl

J.D. Rosendahl

J.D. Rosendahl is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, we recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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