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Friday, June 5, 2009

DSI, DOW and SPX Weekly

I like to use this site for sentiment readings. They are not always timely though.

EWI posted that the Daily Sentiment Indicator (DSI) that they track is now 86 yet again on Thursday after an 86 reading on Monday and Tuesday. This was after the 930 high of early May was about an 85 reading. So maybe DSI is also "knocking on the door" to a penthouse move to the top. And then when there is nothing left but out below.

The Oct 2007 peak was an 88 reading. Somehow I have a feeling that the DSI is knocking on the door to a reading to hit into the 90's. It just doesn't seem a "top" would not spike up in one final fit to a new high. P2 deserves a DSI in the 90's. It often hits the 90's for other markets such as gold, etc, so it is not unusual.

So it too supports my thesis of a move over 950. The other real driver in this market is the DOW. Once it broke above 8500, its like a dog chewing on a bone and I think it can smell DOW 9000. DOW trades with two new members come Monday: Cisco and ...I forget. Should generate one last bit of excitement sometime next week. The DOW has been lagging all year. It is very near its 2008 finishing price. 2 new members may help weight in the final direction and a peak north of 9000. The DOW is now rallying above its 200DMA for the first time in over a year.

None of this HAS to happen and we may have seen the highs. But did it feel that way today? Bulls were hanging around. It just seems to me, sentiment-wise, this thing would finish off nicely in one last squeeze for old times sake. Make the unbelievers ,believers.

Also the SPX weekly candlestick suggests more upside this week, even if only a spurt. The weekly is showing small signs of topping, but a move to 975 or higher is certainly possible.

The weekly upper Bollinger Band lies at 968 and the weekly 50MA lies at 978. It would make sense for the weekly to hit the upper BB, its come so far! Also one final kiss of the 50MA would be fitting. This is what happened last May 2008 on Intermediate wave (2) of P1.

Its close though. I see stories abound talking about the market and its bullishness. No more talk of a "needed, healthy correction". Now its about how this thing might go higher and might last quite a while. Sure signs we are getting near the final week(s) of P2 at least for the initial significant top.


  1. Dan, why dont you just believe that the BULL market is back...

  2. May be the Bull will surprise everyone to the upside

  3. Thanks Dan I tend to favour the way you are looking at things . The last 3 days have produced higher lows and the volume up here isnt exactly climatic so...

  4. LSE, DAX, HSI, NIKKI all have neg. divgence.
    The market are heading lower next week.

  5. Wave 5 of 5 played out today
    Down waves will start next week.

  6. IndiaBoy said...

    Dan, why dont you just believe that the BULL market is back...

    Very funny Indiaboy. The thing is that as far there´s only zigzag waves with dowjones for upside, it could go the 40000 points in next 17 years but as far there´s no single impulse waves available all waveboys are bearish. Kontratieff charts won´t make room much for bullish boys in next years to come.

    But serisouly, I think there´s too many bearish boys out there, we could see some blow of with massive stops because there´s also inverse HS patterns like with gold.

    Just saw that happened today with UsdYen also as inverse.

  7. dan, do you ever check $spxa50r ? it hit a higher high in this rally than the preceding bullmarket , we are going down , thanks for making sense out of this daily.

  8. Bulls have 2 chances to attack the 200 week moving average. It's either right now over the next couple months nonstop, or take a chance and let it retrace to the 825 to form the right shoulder on the inverted H&S and try again in the fall. My wild guess is a lot of effort by hook or by crook has been made by FED/Treasury to get here and they will try, with any failure up to the 38% retrace level around 1014, giving them a second less desired chance to attack the 200 week later in the fall. Too many extinct bears and crushed hedge will not be around in the fall to provide the rocket fuel we saw since March.

    Guessing the forced parabolic move will fail somewhere between the 50-62% retrace level. The point will be on the trendline connecting the top in Oct 07 and May 08 (your Kissed 50MA point).

    Reason is because I believe your serious Bear resistance line will be taken out before the Fourth of July decisively with big celebrations on CNBC and Cramer doing victory dances and endless fields of "Green Shoots" stories. You might get one retrace from the 38% line back to the trendline before going higher, with the 50% a little more difficult and the 62% level impossible to surmount the Oct 07-May 08 Trendline on this parabolic move. You will get a rolling 1-2 month distribution top along that trendline until some come to Jesus event in the fall lifts the dreamy clouds and the sober rays of reality shine through to the celebrating bulls.

    P2 is disbelief and denial, I don't quite see that has taken itself to the limit. I still see grandma on the SKF board still daytrading the short side for the past few sessions. 999 is cool maybe I should take some profits, but not OMG it's going higher I gotta get in before I miss the boat.

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  10. After the right shoulder developed we are heading to 1100

  11. Travelers is the other company (along with Cisco) that is joining the DOW on Monday.

    Also on Monday, we shall see what Obama and Biden have to say about the new ways the govt. is going to "ramp up" the recovery in the economy (and in the market). Since so much of P2's relentless rise was due to unprecendented levels of govt. money, tricks, and spin...we shouldn't underestimate the actions the govt. is willing to take to keep P2 going higher and longer. Just a caution, because a lot of us bears have been greatly hurt in P2 by "fighting the fed" (and the trend).

    Remember, the govt. is rightly terrified of the market crashing to DOW 300 (like EWI predicts). If any of us were President, would we just passively let everything crash to catastrophic lows? No, the govt. will fight like mad every step of the way to prevent a PAINFUL 30's-type depression.

    Daneric: with your last words being "at least for the initial significant top" are you leaving open the possibility that P2 may not top for good at 950 to 988, but after a major correction (of 38% to 62%), P2 might resume its uptrend to finish finally at, say, 1050 to 1150?

  12. Keeping things simple...

    A classic wave 2 target is the high of the previous wave 4 (P1). That point is coming shortly on the S&P, Nasdaq, and Russell charts.

    I took P2 profits Friday and won't be long again (only a couple of commodity plays only) until those targets pass by.


  13. SRS, yeah I guess so. But I rather see a p2 top here and now.

    Government cannot do anything. They are only reactive.

    Fed declared they would drive bond rates down. What happened? They went nothing but up ever since they announced that.

    Governemnet is merely the ultimate consensus group. And always behind. They will take steps to ensure the market's collapse although they know not what they do.

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