A New Dow High--TADA

Market Action:
As we mentioned in our last post, Tuesday evening, IBM kind of dropped a bomb and as the market opened on Wednesday, the Dow opened down. There was another issue having a little play and that was the Blackberry network was down, globally, and the market didn’t like that until the service was restored at which time the stock (RIMM) traded much higher.

Of course, you know the rest of the story, the one about how the down opening was then bought and the market droned higher all day long. Yes, well we’ve seen this replay so many times it’s almost getting easy to trade except that…

Opinion/Analysis:
We interrupt this rerun to bring you new commercials about a new product. It’s called a C wave and it is going to change the way some think of these buy the dip mornings at least for a little while. Or, at least we are hoping that is true based on the indicators we see. The Dow nicely made a new all time closing high on Wednesday after trading a bit higher than that and that is where our story begins boys and girls. Tell me more, you say?

Well, as we mentioned a few posts ago, the market “felt” like it wanted to go higher and put a new high in the Dow and we “felt” like that would happen on Wednesday since this is options expiration week. An interesting thing happened on the way to that headliner high in the Dow, the NASDAQ decided not to participate and neither did most of the stocks in the broader market.

After Monday’s gap higher opening in the NASDAQ Comp, this index has failed to generate new closing highs and on Wednesday, it was down most of the day with only a few moments spent in the green. The NYSE had decliners outpacing advancers by about 9-7 while the NASDAQ had an even higher ratio but, of course, that index was down on the day.

So, now you want to know about the C wave. The C wave is a strong wave in the direction of the trend of the market, which we think is down. We have just finished a B wave which is Counter to the main direction of the market. Unfortunately, we can’t say for certain which level the C wave is so we need to wait and see how far this will take us. The estimate we mentioned in yesterday’s post was that the Dow/market would make a new low for the year on this move. That may be somewhat in question tonight but we will keep an eye on the down move to see how strong it really is.

The futures are trading somewhat lower this evening probably due to the drubbing in the Asian markets with the Nikkei down about 1.5% and the Hang Seng also down about 1.5%. Check that, the Nikkei just opened after the lunch hour (yes, they close the market for lunch in Japan) and it is now down over 2%. We are fairly confident that the Dow put in at least a short term top on Wednesday afternoon but if it goes higher, we will not be surprised; this market has shown some amazing resiliency. But, we do think the market has climbed to the top of the mountain and now it is bowing to everyone and anyone who will see--TADA.

Dow Industrials: 12,803.84 +30.80
VIX: 12.42
HUI: 361.99
QQQQ: 45.01
QQQRS: 0.98 bid
QQQRT: 1.44 bid
RYVNX: 16.15
RYAIX: 21.04
RYCWX: 34.16
TLT: 88.53
BEGBX: 14.02