Despite the panicked close on Friday, the breadth, while weakened, remains fairly ok and stretched to logical bounce areas.
Our Zweig is down to the 43 area:
And while price is making a lower low than mid-December, CVI is relatively stronger; that is a bullish divergence:
Not quite the same for the 40 DPI:
Our NHs/NLs hasn’t suffered much and there was actually an uptick on Friday!
Our trenders are suffering but they are not ready to call a downside trend yet. It remains a waiting game as the quality of the bounce is determined.
There is a special post just about the Zweig today which you can read here: http://www.redliontrader.com/zweig/breadth-our-zweig-is-slip-sliding-away-day-7-and-now-7-points-away/
We remain cautiously optimistic that the bulls can stretch one last time here and get that 61.5 in the next four days. The next four values dropping off the 10-day average are very weak, so a great day addition with a weak day drop can really pile on the points. We only need 7.
Not much to say about our CVI. It is a little weak, and we don’t like that the accumulating volume is so light. We would like to be in the 65’s than 62’s in here.
The 40 DPI has us a little happier in that camp, showing the breadth of the bounce to be wide spread:
We particularly like the NHs/NLs chart as it indicates that money is still buying into perceived quality, or at least popular quality.
Trenders are all about the bull and want us to buy into these dips:
I wanted to send out an early addition for your perusal. The Zweig finally hit oversold. That in its own is not a buy signal, but the plunge that got us here and the DPI hitting below 20 have us on bounce alert. The exciting thing is is that a Zweig move above 40 starts the Zweig Thrust counter.
Note that coming out of the May correction, the actual low in price was hit on a higher Zweig reading. That is a great buy signal. So while we are not sure the lows are in, we do think there are higher prices ahead before a retest from here. If you can’t handle getting stopped out or 10 point type stops, you need to wait for some confirmation.
Here is our Zweig, finally oversold again, 1st time since June:
Nice move down on the CVI:
Our 40 DPI sits below 20, another benchmark we were looking for:
NHs/HLs stretched just about as far as they can:
Don’t need to share the trenders, but the distance between the 15DMA and the index is stretched: