The Waiting Place… INDU, SPX & NDX

…for people just waiting.
Waiting for a train to go
or a bus to come, or a plane to go
or the mail to come, or the rain to go
or the phone to ring, or the snow to snow
or waiting around for a Yes or a No
or waiting for their hair to grow.
Everyone is just waiting. –Dr. Seuss

Everyone is also just waiting for these markets to break down or go up. After the excitement of the spills and thrills that began at the mini mania’s top (remember all those new discount broker accounts opened in Q4 into January?) we are firmly in consolidation. Just waiting.

Some see Symmetrical Triangles forming in certain indexes, like the Dow. I am not bothering with drawing lines. You can see it clearly enough. A problem for that view of a bullish continuation pattern is that it is taking place below the SMA 50 and as of now Dow is also below the short-term ‘momentum’ averages (EMAs 10 & 20). MACD and RSI are still in the red but ADX does however, show neutralized formerly-overdone upside momentum. -DI is above +DI and shows a slightly negative trend still intact from when the index first cracked. The Dow’s first higher high or lower low is going to tell the tale of the bull or the bear. To me, the correction scenario is still intact, but if that turns out to be a Sym-Tri, it’s a bullish continuation pattern.

indu

SPX is in a significantly better technical state in a series of higher highs and higher lows. MACD and RSI are positive and as with the Dow, former unsustainable momentum is neutralized. To boot, SPX is filling a gap below the SMA 50. From a long ago read book by Stephen King… “nope, nuthin’ wrong here.”

spx

NDX is better still as it dwells above the top of a bullish pattern easing down to test it and possibly fill the gap per this post and this post, which used 30 minute charts to make the point and micro manage it.

ndx

Bottom Line

The 3 indexes shown above show a progression from one that is suspect but unbroken to one that is leaning bullish until proven otherwise to another that is just plain bullish and testing key support. On the last 2 charts the gap fills would be nice if the market resumes bullish and the correction is done. The Dow has already filled its gap and that would be a benefit if NDX leads the charge and these go bullish again.

However, there is also a less favored scenario where NDX (and SOX) made bullish throw overs to blue sky that would ultimately fail as a bull trap. So for me, I stay in the waiting place. I’ve taken some profits, limited a couple losses, sold my bond funds (except for a large SHV position and a much smaller position in SHY), covered a few shorts and am just waiting… pleased to go either way because that will be the market’s decision and our job is to go stay in line with the market.

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