The Emini closed up 9.75 points at 1,440.75 on Friday. Strong rally into the long weekend holiday after some profit taking on Thursday afternoon. Time for me to re-assess the market after taking profits and stepping aside on Friday. Also check out the new page all about the Trading Index (TRIN) and great indicators that can be built using the data. You can find the TRIN Indicator article here.
Red daily bar = Uptrend; Green daily bar = Downtrend
The chart above best summarizes my thoughts on the overall market direction. This is the trusty John Ehlers Hilbert Sinewave plotted below daily Emini bars. We had the uptrend breakout on 18 August 2006 at 1,328.25. The dotted white line represents this level and is automatically plotted by TradeStation.
Since then a long Elliott wave 3 with no Sinewave crossovers (no cyclical component) until 4 January 2007. The dotted red line (somewhat difficult to see) at 1,416.50 represents this support level and is the beginning of a final Elliott wave 5. The completion of this move will be signaled when the Sinewave crosses at the top of its current upswing (or shortly afterwards).
The market certainly feels over-bought at the moment. Two of my four trend oscillators are at their highs. In addition, the bond market is not supporting the current uptrend and that's a worry.
However, none of my four exhaustion indicators have signaled a top. No Trading Index (TRIN) divergence, Dow NASDAQ divergence, price or volume pattern. And the Hilbert Sinewave and Smart Money oscillators are saying "not yet". So probably time to buy pullbacks, shoot for smaller profits and keep watching day-by-day.
New page on Trading Index (TRIN)
Spent some time over the long weekend writing a new page all about the Trading Index (TRIN) and some unique indicators that can be built using this non-price market data. You can find the TRIN Indicator article here.