BarroMetrics Views: The S&P 2009-10-22
We may be at the start of the much awaited S&P correction. The question is whether it will be the magnitude of an 18-day (monthly trend) or a 13-week (quarterly trend).
Let’s turn to the charts,
FIGURE 1: (By the way, the Normalised Volume chart has a new look. Because a number of Video/Forum readers asked me for a visual display of ‘normal’ volume, I have added a 5 day (brown), a 10 day (blue) and 20 day (red) simple moving average of volume. Hope the addition of the averages will provide an adequate display).
By any of the three moving averages. we had at least normal volume last night. We also had above normal range. Consequently, this chart suggests continuation tonight.
FIGURE 2: The Daily Delta shows only light selling control and this would be normally bullish.
FIGURE 3: But the split Delta shows that the early buyers were overcome by heavy selling; thus the Split Delta confirms the Normalised Volume chart.
FIGURES 4 &5: Finally, let’s have a look at the Barros Swings . The first shows that acceptance below 1072 (basis cash, 1067 basis Dec) projects a move to 1018 (basis cash). Figure 5 shows a Linear Regression Band, 3 stdev from the March lows. The Band represents the 18-day trend. An 18-d correction will not accept below the Band.
If this is an 18-d correction we’ll probably stop the down move at the red circle; if this is an 13-w correction, we’ll probably stop at the black rectangle. If the latter, I’d expect to see the black MIDAS move into the black zone by the time prices reach there.
In my view, either correction will be a buying opportunity.
Figure 1 Normalised Volume
Figure 2 Market Delta Daily
Figure 3 Market Delta Split
Figure 4 Barros Swing 5-day
Figure 5 Barros Swing 18-day
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