The Weekly Report for November 12th - November 16th, 2007

November 11, 2007- Market Summary
In our last few reports, we've mentioned a large divergence between the number of issues that have been creating new highs and the number making new lows. According to the relatively uncommon indicator known as the Hindenburg Omen, divergence between the number of highs and lows is a sign that the conviction of market participants is weakening and that that they are unsure of the market's future direction. Last week, we saw a shift in market breadth, with major market declines pushing many companies’ stock prices to the lower end of their respective 52-week ranges. This could be used by the bears to suggest that the short-term momentum will remain downward.

Charts of specific interest this week are of the Dow and S&P because they've both fallen below the long-term support of their 200-day moving averages. This is technically significant because a close below the long-term moving average is a sign that the prolonged uptrend is changing directions. It will be important that the bulls respond and push the indexes above the 200 DMA if they'd like to see the uptrend continue. We'll keep a close eye on the market breadth as well as the volatility index to determine whether the worst is yet to come.

To learn more about this interesting indicator, see Beware of the Hindenburg.

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