>Waiting for the Other Shoe

>The markets all broke out of handle-like formations a few weeks ago, as noted below, but then didn’t really go anywhere. Instead, the numbers of stocks up and down on big volume both went quiet, and the indexes traded in a relatively narrow (flat) range. Meanwhile we saw a number of leading stocks pulling back mildly on contracting volume. Then yesterday we saw a sharper drop (finally).

Interestingly, the number of stocks down on big volume did not spike upwards yesterday, but the number of Climax Lows did increase. Not dramatically, but significantly.

Today could be the bounce. Leading stocks by now have mostly pulled right back to their recent pivot points, and should either rebound from here, or break down. We’ll know more about 8 hours from now, after the day has transpired.

I was testing out the new Volume Dryup flag, and noticed HTLD. This is not the hottest thing around, but has been swinging back and forth between about 14 1/4 and 16. The Pristine buy signals have been working well (I did not check the sell signals). But the interesting feature yesterday was a cool little volume dryup flag after a pullback exactly to both the 50-day Xma and the 200-day Xma. If it’s going to bounce, this would be the setup.