As you can see in the chart above we just happened to stop on the Pink uptrend line, and the full stochastics are still in overbought territory which tells us we MAY still have some downside work to do next week. A break of the Pink line sends us to the blue line and 50 day average rather fast because that move up out of the sideways consolidation took place during low volume holiday trade.
While the daily time frequency chart shows some more downside work could still be in store due to the full stochastics still up in overbought territory, the chart above which is the 60 minute time frequency chart shows the full stoh's oversold. Odds favor the full stochastics need to be reset back up into overbought territory before we move lower in the daily charts.
Moving on to the OTC composite
The indexes still have a ways to go to test some support levels as Friday was day one to the downside. However, many names on our list have been selling off for days vs. the indexes. Many of these names were the leaders that were either pushed into year end window dressing or have been on a tear recently. We call them the "Follow The Screamers List". These names are ahead of the market and will most likely be the ones to turn around to the upside first when the market makes a rally attempt.
Over a week ago we talked about the name of the game was to be on the lookout for chart patterns that were of a Grand slam down to the 50 day average. Here we are and sure enough we've got a boatload of issues that have just grand slammed down to the 50 day average.
A few weeks ago we talked about the follow the screamers as they are the leadership. We are firm believers in paying attention to what the leaders are doing. If the leaders are pulling back then the rest of the market isn't far behind. Case in point, a lot of those names on that follow the screamers list were rolling over days before the markets finally gave it up on Friday by having one day basically wipe out the whole year to date gains (S&P 500). So much for the "as the first week of the year goes so goes the year end". Big deal, we've never listened to that gibberish anyway, we listen to the market via charts and so should you.
The next few weeks folks we really want to be on our toes because there is a good possibility that we are going to be putting in a top here in the market and we not only want to protect the longside of our accounts but we also want to be prepared to profit from that by increasing our short exposure as patterns present themselves.
Over the next week or two we will start to be covering change in trend patterns (from up to down) so that we are prepared for that in advance.
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