11/26/2009 8:25:06 AM

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Wednesday break of the dollar triggered a lot of strong moves...

Stock Barometer Analysis

The Barometer remains in Sell Mode. However, it is turning higher at an extended level. We're very cautious here with our key reversal date on the 30th. I would prefer to see the market move sharply lower on Friday and Monday and that should mark a bottom.

The Stock Barometer is my proprietary market timing system. The direction, slope and level of the Stock Barometer determine our outlook. For example, if the barometer line is moving down, we are in Sell Mode. A Buy or Sell Signal is triggered when the indicator clearly changes direction. Trend and support can override the barometer signals.

Stock Barometer Cycle Time

Friday is day5 in our DOWN Cycle.

The Stock Barometer signals follow 5, 8, 13, 21 and sometimes 34 day Fibonacci cycles that balance with 'normal' market cycles. Knowing where you are in the current market cycle is important in deciding how long you expect to maintain a position.

Potential Cycle Reversal Dates

2009 Potential Reversal Dates: 1/20, 2/11, 3/7, 3/15, 4/8, 4/16, 4/27, 5/7, 6/8, 7/2, 7/17, 9/14, 10/2, 10/10, 10/24, 11/12, 11/30, 12/9, 12/21, 12/29. We publish these dates up to 2 months in advance.

We initially believed thatthe market would move lower into 11/30, our next key reversal date. However, prices could hang up here into that date, setting up a larger retracement. What happens in the next couple of days is very critical to how December plays out...

My Additional timing work is based on numerous cycles and has resulted in the above potential reversal dates. These are not to be confused with the barometer signals or cycle times. However, due to their past accuracy I post the dates here.

2008 Potential Reversal Dates: 12/31, 1/11, 2/1, 2/13, 3/6, 4/5, 4/22, 5/23, 6/6, 6/27, 7/13, 9/2, 10/3, 10/22, 11/10, 12/11. 2007 Potential Reversal Dates: 1/10, 1/14, 1/27, 1/31, 2/3, 2/17, 3/10, 3/24, 4/21, 5/6, 6/15, 8/29, 10/19, 11/29, 12/13, 12/23, 12/31, 1/11/08. 2006 potential reversal dates: 1/16, 1/30, 2/25, 3/19, 4/8, 5/8, 5/19, 6/6(20), 7/24, 8/20, 8/29, 9/15, 10/11, 11/28. 2005 Potential reversal dates: 12/27, 1/25, 2/16, 3/4, 3/14, 3/29, 4/5, 4/19, 5/2, 6/3, 6/10, 7/13, 7/28, 8/12, 8/30-31, 9/22, 10/4, 11/15, 11/20, 12/16.

Spread Indicators

Use the following spread/momentum indicators to assist in your trading of the QQQQ, GLD, USD, USO and TLT. They are tuned to deliver signals in line with the Stock Barometer and we use them only in determining our overall outlook for the market and for pinpointing market reversals. The level, direction, and position to the zero line are keys in these indicators. For example, direction determines mode and a buy signal 'above zero' is more bullish than a buy signal 'below zero'.

QQQQ Spread Indicator (NASDAQ:QQQQ)

The QQQQ Spread Indicator will yield its own buy and sell signals that may be different from the Stock Barometer. It's meant to give us an idea of the next turn in the market.

Gold Spread Indicator (AMEX:GLD)

Want to trade Gold? Use our signals with the Gold ETF AMEX:GLD. Gold gives us a general gage to the overall health of the US Economy and the markets.

US Dollar Index Spread Indicator (INDEX:DXY)

Want to trade the US Dollar? Use our signals with the Power Shares AMEX:UUP: US Dollar Index Bullish Fund and AMEX:UDN: US Dollar Index Bearish Fund.

Bonds Spread Indicator (AMEX:TLT)

Want to trade Bonds? Use our signals with Lehman's 20 year ETF AMEX:TLT. The direction of bonds has an impact on the stock market. Normally, as bonds go down, stocks will go up and as bonds go up, stocks will go down.

OIL Spread Indicator (AMEX:USO)

Want to trade OIL? Use our signals with AMEX:USO, the OIL ETF. We look at the price of oil as its level and direction has an impact on the stock market.

Supporting Secondary Indicator

We daily monitor hundreds of popular and proprietary technical indicators that break down market internals, sentiment and money flow to give us unique insight into the market. We feature at least one here each day in support of our current outlook.

Summary of Daily Outlook

Weremain in Sell Mode, looking for a move lower into 11/30. However, if prices hang up here, then we'll see more selling in the beginning of December.

The EIOVR suggests we're on the verge of a larger move higher.

Here's a chart of Nasdaq Cumulative Breadth - Note the relative low level of breadth in relation to the move higher. This could mean two things. Either the market advance is on narrow leadership and that's bearish. Or (and the one I like better) the advance is in its early stages as there are many more stocks to start participating in this advance...

Humans are an optimistic bunch, and we like to lean towards the positive outlook...

Or you could joint the perma bears out there (can you say Prechter?) and call for a move down to dow 2000... Sure, during bear markets the bear story sells really well and you can hang your hat on being right, but it gets old when you're 9 months into a bullish advance.

The move in the dollar triggered some other sharp moves - i.e. gold cranked yet again, GAZ is finally moving higher off a base, TMF broke resistance to initiate a continuation of the move higher and USO flashed a bullish engulfing. I'm looking closer at the oil trade, but it's unfortunate that they stopped trading in DXO (2x oil bull ETF). I don't think it had anything to do with the previous advance in OIL - but who am I to say. But if DB is out there listening - please bring it back :) I would be thankful for that...

Hope you and yours have a happy thanksgiving.

If you have any questions or comments, email me at Jay@stockbarometer.com.

Regards,