MktRSI for March 1, 2010

Our trusty MktRSI indicator and it's companion MktDiff indicator both have their own views of the market internals.MktRSI is good at anticipating the extreme highs and lows in the market, anticipating sharp turns, while the MktDiff indicator demonstrates which signals are stronger than the noise.

 There are also divergences one can see in the MktRSI and I've pointed out some examples in the chart below. I'll be watching to see if the next couple of days has a setup of a divergence like the examples.

Klatuu

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Market internals expecting a drop

MarketRSI is showing a decided drop in it's recent price momentum. This can be seen on the chart below by following the Black line in the lower indicator. Usually when this indicator hits a peak, the price will drop within a couple of days afterward. This drop is followed by a rise in the lows (as you would expect) and can be seen by a rise in the thin red line (noted on the chart below). A good trade is when the redline crosses the blue line of Highs. Although price on the SP-500 has hardly moved over the last few days, it appears the market is getting tired. The SP-500 with MktRSI is on the following chart:

This drop of momentum can be seen in the Dow-30, NASDAQ-100 and Russell 2000. This second chart is the Dow-30.

 

This chart below is the Russell 2000 index.

  

 And finally you can see the same has occurred in the NASDAQ-100.

 

Klatuu

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MktRSI completed trade

We got our exit signal for MktRSI and it played out like the other historical signals, albeit with a bearish bias. Below is an updated chart of the SP-500 showing the exit signal marked with a vertical blue line. While normally in a bullish market,  we would have seen much more upside, it appears we are in a trend change.

 

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