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Thursday, October 29, 2009

Another Look at the Rally Trendline and Hindenberg Omen Thoughts

Here is another look that the Rally Trendline since August. Lets examine breadth and momentum as well. And lets take a gander at INDU and RUT for good measure (as they are telling nearly *OPPOSITE* stories).

We have a huge amount of momentum divergence. But the biggest and most important observation is that this rally trendline has been support. By that I mean on the pullback, the price would stabilize around the trendline for a 1-2 days, turning around, and then a new wave commences.

That is, until today. Today is a bounce. Pure and simple.

Can a new wave initiate from a bounce? Sure.

But this isn't March 9!!. We are not free-falling in the midst of utterly oversold conditions. V-bounce rallies happen in that kind of environment. Not the one where we have now: overbought conditions with waning momentum.

Now, look at the trainwreck of dis-information that these 2 indices are telling us. If we wanted to see how the Hindenberg Omen might form at a peak ... I would say it would look something like this. (Thanks for all your work on this Col !!!)

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