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Monday, January 4, 2010


SRS was green again today despite the markets up some 1.6%.  Thats got to account for something.

Like most indexes, I have IYR in a triple zigzag.  And also like most things, it is coming up on its bearish rising trendline. Also note the double negative divergence on the RSI.

But more importantly, IYR has a lot of overhead resistance. The only real subindex that has managed to chew through a comparable level is the qqqq's.   I still have a potential target box to rally where the breakdown point gap is. Its not too high above, but maybe its a bridge too far. After all, above the red line areas represents the peak "housing bubble era" (of which we have yet to correct enough).  Are we really saying that this index should venture back into that stratosphere range above 50?

I haven't done financials much lately because they haven't been giving good readouts.  Their job has been to not fall it seems.  They are certainly not oversold on any chart nor are they overbought. They are fighting a big bear resistance line that comes down on the log scale from 2006.  They are at that line today. If they can catch a manipulated bid, well, that would put some rotational oomphh into the rally for another day or so down the road.

But like IYR, financials have a ton of overhead resistance not only from years past, but also from their peak a few months ago.   Citibank failed to dump shares on the market, I think they will try again soon.

The RUT is in a beautiful wave pattern and the Fib relationships are very tidy indeed. Check out the wave [iv] textbook expanding triangle, I should have seen it this weekend but I wasn't looking.

Notice the triangle target matches the [v] = [i] target.

And again like IYR and BKX, the RUT  is coming up on long term resistance.  As I said, only the cash-rich companies of the qqqq's (Crapple, Goog, et al) have been able to chew through some of this resistance.

Again, are we willing to say the small caps of the RUT should be back up in the bubble years along with real estate?

So how anyone can keep painting really high targets without first considering how these sub index sectors are going to deal with overhead. Also notice the negative weekly divergence.  Combined with the 30 minute chart, and the overhead resistance, are you so sure if your a bull?

Also again, note the steep rising bear trendline. Can this be obeyed forever?  I suspect we'll find out soon enough.

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