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Saturday, December 28, 2013

Technical Review of NYSE Composite

Chart 1: NYSE Composite Trend Energy


Chart 2: NYSE Composite Long Term Trend


Comments:

  • Chart 1:  REV(E)'s higher highs and lows reflects growing energy behind the trend;  REV(E) established new highs this week.
  • Chart 2:  Today's rally should find resistance at 10387.  10387 is the 2007 all time high.  A quick retest of 10200, not a forecast, would suggest continuation rather than correction.  A breakout from the all-time highs should create an up leg that at least tests the upper trading channel (light blue line).
  • A breakout to new highs increases the probability that capital will continue concentrating in US stocks.  Increased concentration likely accelerates the up trend and encourage the reluctant public from the sidelines into stocks.
  • The public's involvement could mark the beginning of a virtuous stock cycle.  Virtuous cycles, while extreme profitable for traders, usually end in tears for both Wall Street and Main Street.


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