For Thursday, January 5th. …
An Update on last week’s “Is the Market Strong or Weak?”
The NYSE Index (also known as the NYA Index) is a good index to look at because of the amount of money flow it experiences from the bigger players like Institutional Investors, Hedge Funds, or Mutual Funds.
So today, we will look at a very simple chart that tells a story.
To illustrate the market story being told by the NYA Index, we will look at a 5 month and an 8 month time period.
On the top half of the chart, the focus is on an eight month period of time where we drew the resistance line for the NYA’s C-RSI Strength level. There are two things to notice here … 1.) that the slope of the resistance line is saying that strength has been trending down over time, and … 2.) that even as of yesterday, the C-RSI didnot have a breakout above the resistance. That says that the NYA’s strength was still in downtrend.
On the bottom half of the chart, you can see the action of the NYA Index itself. If you look at a smaller time period (like 5 months) and draw a resistance line, you end up seeing that the NYA Index tested its resistance line and broke through to the upside this week.
What does all this mean?
It means that the NYA Index did have a technical breakout to the upside, but it did it with sub-par strength. That means it may have trouble holding its breakout and will likely require a retest of its support line which is at 7475.95 for January 5th. (For another, longer term up leg in the market to happen, it will need the C-RSI to move above its resistance line. Note: The C-RSI is a zero based, 30 day Relative Index strength reading.)
Marty Chenard: www.StockTiming.com
