CYCLE GAUGE AND MARKET INTERNALS

CYCLE GAUGE AND MARKET INTERNALS for week ending Oct 14th 2005
S&P500
Weekly Market bull/bear skew (C+D) is still BEARISH – 77% (prev 71%) and gaining strength. The Topping skew (B+C) continues to trend down (50%). Any change of trend in this skew warns of a change of price action swing. There has been very strong rotation from Phase B into Phases C and D. Phase B continues to trend down, Phase D continues to trend up and Phase A remains flat suggesting that the current down swing may have further to go. We usually see a pick up in rotation into Phase A just before a trough in price action. The weekly Cycle Gauge is C2. This indicates that the market has been in the Distribution Phase for two weeks.

19.4% (33.5% prev) of stocks closed above their 4 week MA.
43.2% (51.8% prev) of stocks closed above their 30 week MA.
46.4% (52.8% prev) of stocks closed above their 52 week MA.

Comment

• CG is DOWN in all three time frames.
  
• Weekly CG is C2.
  
• Volatility has begun to build momentum in the medium term time frame and the RSI of volatility has crossed back above the OS zone=> expect to see trending action within the next few weeks as volatility begins to trend up from a cyclical trough.
  
• Only 19% of stocks are above their 4week MA => expect to see the down swing terminate if this number moves above 30%.
  
• 43% of stocks are above their 30week MA => this has downside implications in the medium term time frame unless it begins to pick up.
  
• Support around 1180 was breached last week but the market still hasn’t closed below it.

NASDAQ100
Weekly Market bull/bear skew (C+D) is BEARISH – 67% (prev 62%) and gains strength. The Topping skew (B+C) continues to trend down (49%). Any change of trend in this skew warns of a change of price action swing. There was rotation from Phases A and B into Phases C and D. Phase B continues to trend down and Phase D continues to trend up - expect the current down swing to develop further as the trends remain intact. The weekly Cycle Gauge is C2. This indicates that the market has been in the Distribution Phase for two weeks.

22% (37.5% prev) of stocks closed above their 4 week MA.
44% (53.5% prev) of stocks closed above their 30 week MA.
43% (46.6% prev) of stocks closed above their 52 week MA.

Comment

• CG in both the short term and medium term time frames is DOWN.
  
• Weekly CG is C2.
  
• Volatility continues to lose momentum in the medium term time frame and the RSI of volatility has turned up from near the OS zone => expect to see strong trending action within the next few weeks as the trend in volatility continues to trend up.
  
• RSI of volatility in the short-term time frame is trending up => warns that the current down swing may develop further.
  
• Only 22% of stocks are above their 4week MA => expect to see the down swing terminate if this number moves above 30%.
  
• 44% of stocks are above their 30week MA => this has downside implications in the medium term time frame unless it begins to pick up.
  
• Support around 1550 taken out last week.