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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

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NOTABLE POSTS WITH IMPORTANT UPDATES...

Tuesday, October 02, 2012

Major Indices and Sectors Consolidating Near the "Mean"

After simply drifting lower from their upper Bollinger Band on the Daily timeframe, most of the 6 Major Indices and 9 Major Sectors have been consolidating recently at/near their "mean"...that is, around the mid-Bollinger Band, as shown on the line charts below.

The exceptions are the Dow Transports (underperforming), Dow Utilities (outperforming), Consumer Staples (outperforming), and Healthcare (outperforming).

As you can see, the Defensive Sectors of the markets are outperforming the others at the moment, while the others contemplate a 50/50 chance of either drifting down to their lower Bollinger Band or resuming their trek upwards from here. Either way, the risk/reward ratio for both scenarios stands at about 1:1 while price remains at the "mean"...a rather risky ratio, indeed.

Assuming that the Defensive Sectors hold up to, potentially, hedge against risk of the others continuing further down, we may see some buying begin on the other Sectors/Indices before they reach their lower Bollinger Band. So, the Defensives are the ones I'd watch closely for any clues that real weakness is, generally, entering all of the markets. Of course, the Defensives could hold temporarily until the others rally for a very short while, forming double tops (based on the daily closes) at the upper Bollinger Band, before any serious pullback/correction occurs. I'd also watch the Nasdaq 100 and Russell 2000 Indices to see if they can recapture and hold above the "mean" as a confirmation of a renewed "risk-on" rally.