Dow Reaches a New 2009 High, But Divergences Remain

As I tracked the pre-market on Monday I saw that the Dow would take out my weekly pivot at 10,076 and reach a new high for the move.

The Dow stayed overbought on its weekly chart throughout the recent sell-off with a MOJO reading of 8.6.

Today’s support is 10,131 with Ascending Wedge resistance at 10,396. Below this range is my weekly pivot at 10,076 and above the range is monthly resistance at 10,833.

The other major averages are below recent highs with some negative divergences.

The S&P 500 – weekly MOJO is right at 8.0 with the October 21^st high at 1101.36. My weekly pivot is 1079.8 with resistance at 1100.2. Down trend resistance that goes back to October 2007 is at 1121.

NASDAQ – weekly MOJO is declining at 7.8 with a weekly pivot at 2140 and the October 21 / 23 high at 2190, and the 200-week simple moving average at 2212.

Dow Transports – weekly MOJO is declining at 6.3 with weekly support at 3693 and annual resistances at 4037 and 4199, which captured the highs of July 17^th and October 21^st, a double top.

Russell 2000 – weekly MOJO is declining at 6.4 with weekly resistance at 595.84. The daily chart shows the 21-day simple moving average crossing below the 50-day at 594.43 and 595.39.

The SOX – weekly MOJO is declining at 5.8 with my weekly pivot at 305.41. The daily chart shows the double top and the 21-day simple moving average crossing below the 50-day at 314.39 and 316.78.

Housing, and Community and regional bank

The Housing Sector Index (HGX) has declining weekly MOJO with a reading at 4.4. The 21-day simple moving average is a pivot at 99.80 with the 50-day as resistance at 102.86.

Homebuyer Tax Credit Extended and Expanded

The $8,000 first time homebuyer tax credit has been extended seven months to sunset June 30, 2010, as long as the contract is signed by April 30, 2010. In addition, current homeowners who buy another home will get $6,500. The homeowner must have lived in their current home for at least five years.

The IRS has received 1.4 million requests for the $8,000 homebuyer credit through August, but processing delays could become an issue as applicants have been waiting six months on average to get the money.

The America’s Community Bankers Index (ABAQ) has declining weekly MOJO with a reading of 3.6. The 21-day, 50-day and 200-day are resistances at 145.14, 147.12 and 143.52.

Bank Failures 2009 – Scorecard

In the first half of 2009 the FDIC closed 45 banks, which cost the Deposit Insurance Fund $12.5 billion. In the second half of 2009 through November 6^th the FDIC closed 75 banks, which cost the Deposit Insurance Fund another $19.8 billion. So clearly the banking crisis is worsening.

The Regional Banking Index (BKX) shows declining weekly MOJO with a reading of 5.5. The 21-day and 50-day are resistances at 45.21 and 45.90.

Disclosure: I Hold No Positions in the Stocks I Cover.

Comments

[John Galt:]

The bank failure scorecard isn't neccesarily fair.

A couple Fridays ago we had 9 banks fail and it barley made a news story which is a story in itself... What's worse, 9 small banks fail or one Washington Mutual?

That's why the comparison of today's number of banks failing to the 1930's is unfair. Hundreds of community bank failures, compares to these big regional banks failing.

Nov 10 08:35 AM