Short Term Alert: Looking for a rally soon

In my first post I stated that the stock market could get a sharp sell off if it wasn't able to move above last Friday's highs before this week was over. Looks like the stock market decided to be early with selling on Thursday. I also stated that if this sell off should occur then I am looking a better short term rally to start after the sell off.

Below the charts of the Nasdaq and SP500 where both are sold off on Thursday.


In my first post I stated that January 2010 seems to resemble that of January 2004. If this continues to occur then compare the early February 2004 charts below with the current charts above. There was an one day sell off before a decent 5 day rally back higher. I believe the resemblance hints the stock market will get about a 5 day rally in the coming week.

Final note, 'relative strength' refers to one entity being relatively stronger or weaker than another. In looking at the 2004 charts the more speculative technology heavy Nasdaq is showing weaker price action than the SP500. So the medium term down trend for the coming months will mean much more weakness for the Nasdaq than the SP500.