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Tuesday, August 25, 2009

Sentiment and DOW H&S

Up volume ratio days over 10-1 are always noteworthy. You can see at the beginning of P2 there was a cluster. We have had less and less and they have gotten less powerful from the 48-1 day we had early in P2. So that is consistent with a fading rally as well as volume overall is not expanding.

The CPC broke down low yesterday and this morning the put/call ratio was less than .50 I saw it clock in at .49 at one point this morning. I haven't seen that extreme reading since this bear market started. Yet the market painted a big gravestone type shooting star. And now it may face headwinds.

The $BPSPX bullishness chart also registered a new high today. That is consistent with a possible top. You can see it also has the shape of a rising wedge. There are lots of index and indicators on many charts that sport the bearish rising wedge shape. Even the RSI on the SPX sports a rising wedge. Its painted all over the place on many charts and many indicators.

Finally, the DOW has the painted the biggest freaking head and shoulders I have ever seen. I have a parallel line with the neckline and its just about there if not already. Right Shoulder topped?

I don't see how negative divergence would set in on the weekly if a new high is not made down the road. But sometimes the divergence flashes big time nonetheless even if it doesn't make a new high it is often obvious nonetheless.


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