Saved by the DOW

First the bad news: The big technical test is for the August 8 lows to hold – see the inter-day DOW chart below. The August 8 low is Dow 10604 and so at 10680 we are at the tipping point. Can we recover from here? See the breadth observation below

Now the good news – so far The Dow internals (breadth) are today in better shape than back in August 8 At quick look at the Dow 30 components and counting how many are above or below their relative August 8 lows As of 2.50 pm September 22, 2011 – I count only 8 (eight) components trading under their relative August 8 lows. The symbols: AA, BAC, CAT, DD, HPQ, JPM, MMM and TRV - Total 8 - All the rest, a total of 22 (twenty two) components are above their respective August 8 lows

On Selling RIM

A few posts ago I mused that Research In Motion at $23 was almost a joke – unless the market knew something we don’t know - but I don’t think RIM is going bust anytime soon. The technical view of RIM is one of the worst big cap train wrecks I have ever seen. RIM was so bad it had to be good

A few weeks later there was some technical good news on RIM based on a relative perform analysis on RIM vs. AAPL. In August RIM popped from $22 to over $32 then suddenly the torpedo and now right back to $22. Clearly the trade is not working and so I have three choices - sell, hold or add on to the position

Adding on is out because we never add to a losing position unless we planed the original buy in tranches. I won't sell yet just in case we are forming a double bottom. Note the slightly higher money flow lines. I will however sell on a weekly close below the August 8 low of $21.40 - see the daily RIM chart with the stop support line.

The August 8 Lows are Still Holding

The TSX Composite is still trading above support at the 11900 to 12000 level - see the weekly chart below. - Currently the simple 10-week moving average is too far below the simple 40-week moving average where these extreme deviations usually signal an over-sold condition or a pending reversal. Also the very slow stochastic has printed a trough at the over-sold 20 per cent level. The August 8 low is 11618 and should hold so don’t be a seller here  

The Dow Industrials are still trading above support at the 10700 to 10900 level - see weekly chart below - Currently the 10 week MA has been below the 40 week moving average for 6-weeks and is setting up an over-sold condition or a pending reversal. We last saw this condition during the 2010 June – July correction. The very slow stochastic has printed a trough at the over-sold 20 per cent level. The August 8 low is 10589 and should hold so don’t be a seller here