I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Monday, November 9, 2009

What is the Dow Telling Us?

Nothing bearish at the moment, that's for sure. Yes it could be a Dow Theory non-confirmation. Yeah the Dow is archaic. Yeah the Dow is flawed.

But a major, if not *THE MOST VISIBLE AND WIDELY FOLLOWED* stock index on the planet just made a new high. It is an economy wide index. Like it or not. And that is a big deal.

And sectors can top early. I don't necessarily expect Financials, or Health Care, or Energy to end their P2's at the same time as the rest of the economy. But I do stand by the statement that *economy wide indices move together and the **best** count is the one that works on all five* (SPX, INDU, COMPQ, NDX, and RUT). These 5 indices have components across the economy and I *DO* expect P2 to end at the same time for these.

And by definition P2 is not done for the Dow, as it made a higher high.

So I am really looking at the big count. Here is an idea that I have, and am sharing. This is nothing I am trading yet. Just observations based on confirmations and non-confirmations among the 5 major indices.

Addition 5:54 - What this option would look like on the Daily Chart

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