Archive for the ‘The Week That Was’ Category

The DOW remains in a sideways channel and has been so for the last 19 sessions.  Volume has been unremarkable and as we approach the end of the year, one begins to think that this unprecedented rally off of the March lows is too tired to continue the trek higher.  Looking at a 10 year chart of the DOW reveals massive upside resistance from most of 1999 through late 2001 as well as 2004 and 2005.  In my opinion, a push through 11,000 would be significant and probably unlikely at this point.  I see the index going sideways to down in the near term.  We will know more if the DOW breaks out of its’ current Box.  I will be ready to take advantage either way it decides to go.

The SPX tells a very similar story as the DOW.   The current trading range has spent the last 23 days in “The Box”.  The high in the range is 1119 and the low is 1084.  I am watching closely and expect a break soon.  I tend to think that we will break down out of the range, but will be prepared to follow the trend whichever way it decides to go.    There is also long term overhead resistance from 1100 to 1200 from late 2001 to mid 2002 as well as 2004 and 2005.

The COMPQ is also at an inflection point at current levels.  The index has been in a box for the last 9 trading days and is bumping its head against significant upside resistance and will probably continue sideways to down in the short term.  If the index does break to the upside with increasing volume, that would be notable.

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The DOW is currently trading in a sideways range or box.  There is substantial resistance from trading activity in 2004 and 2005.  It should be difficult to continue higher at this point.  The trend is tiring and it appears that it is time for a pullback.  Friday printed a Shooting Star type pattern on significant volume.  I feel that the index will move back down in the range and test the lower trend line of the broadening channel.

The SPX is has also been trading in a consolidation pattern for the last three weeks and appears that the trend has weakened tremendously.  The ADX supports the thesis of a  diminishing trend and we also have a Bearish MACD divergence and crossover with confirmation from a Bearish Stochastics.  We are more than likely headed back down in the range to test the lower trend line of the channel.

The COMPQ has been very erratic over the last three weeks with several gaps and indecisive trading.  There is major resistance at 2200 and I feel that the index will trade sideways to down in the immediate term.  Look for a test of the 50 days simple moving average and the lower trend line of the channel about 2135-2140.

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The DOW traded down 154 points on a low volume holiday shorten session on Friday.  The debt restructure issue with Dubai drove the move.  My feeling is that the move was an overreaction and trading this coming week should sort out the importance of the situation.  The index rebounded nicely off the lows of the day.  With that said, the bullish trend is running out of gas as indicated by the ADX and the low volume associated with the move.  We are essentially trading in a box.  The upside breakout level is the high from 11/23 at 10,496 and the key level to the downside is the swing low from 11/12 at 10,171.

The SPX analysis is similar to that of the DOW.  We are also in a sideways channel on decreasing volume with a target breakout level of 1114 from the high on 11/16.  The downside level to watch is the lows from 11/12 and 11/27 at 1084.  The upside trend is very tired at this point.  A turn to the downside is not far away.

The COMPQ staged a Counterattack type candle pattern after gapping down significantly at the open on Friday.  Again, the move was fundamentally driven by the Dubai situation on low volume.  It is interesting to note that the low of the day coincided with three prior gaps that acted as solid support.  The bullish trend is essentially done.  I see sideways to down from here.  If we do manage to go higher, it will be in very small increments.  There is too much overhead resistance at this point.

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The DOW was rejected by the upper trend line of the channel and ended the week with a Spinning Top.  This could be just a short term pullback  and then a move back up forming a J Hook pattern.  However,  we may have a little more to the downside before continuing higher.  The predominate trend continues up.  Watch for the breakout above 10,438.  If the Spinning Top (very close to a doji) does halt the move down, we could go sideway briefly before going up.  However, it is clear to me that the bullish move is still in tact.

The SPX has a similar story as the DOW.  We have been trading in a box for the last two weeks.  Look for a break out of the box.  I feel we will test the lower trend line before resuming the trek higher.

The COMPQ has been the leader all the way up from the March lows and I see less downside potential here.  I feel that we will form a J Hook chart pattern and then break above the recent high of 3525 and continue higher into the end of the year. 

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The DOW looked like it wanted to pause mid channel on its way up to the top of the broadening ascending channel, however, it continued until it ran into the upper trend line of the channel and then pulled back slightly.  The index is currently forming a tight Bull Flag on decreasing volume.  The key breakout level is the high of the flag at 10,342.  If  the DOW rolls over, it will likely come back down in the channel and retest the lower trend line.

The SPX rose to test the swing high from10/21 at 1101 putting in a top of 1105 and then pulling back.  We have a Cup & Handle chart pattern and the upside target is the first lip of the cup at 1101 and then 1105.  A pullback would take the index back to the bottom of the recent channel.

The COMPQ is also putting in a Cup & Handle with the first taget at 2179 and then 2190.  The index broke back above the lower trend line of the recent channel and will probably retest the lower trend line before bouncing higher.  The COMPQ settled right at 2168 one of the upside targets pointed out from last weeks blog. 

I feel that the market will continue to edge higher through the end of the year and into January.

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The DOW is continuing to rise as I had indicated it would from last week’s blog.  We are in an ascending broadening channel and the Index is currently printing a Hanging Man on decreasing volume that bodes for a possible short term slowing in the bounce.  We may go sideways for a session or two before resuming the move higher in the channel.  We need to break the swing high from 10/21 at 10119 to post a new high the recent trend.

The SPX is also moving higher an ascending broadening channel and also with a Spinning Top/ Hanging Man type pattern on decreasing volume that may indicate a temporary slowing of the recent bounce.  I feel that we will continue higher.  The index needs to break through the swing high from 10/21 at 1101 in order to post a higher high in the current trend.

The COMPQ is moving higher in the ascending channel and looks very bullish.  The index needs to break the recent swing high on 10/21 of 2190 in order to post a new high in the recent trend.  Click here and learn to read charts to profit.

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The DOW broke down out of the recent Bull Flag this week.  The index closed at 9972 on Friday 10/23 and settled at 9713 this week for a 259 point drop.  The lower trend line held and the 50 day SMA seems to also be acting as support.  This may be nothing more than a simple pullback.  It is interesting to note that  all of the doomsday people come out of the woodwork on any kind of a correction.  The fact is, we have had three pullbacks since August and this one is not any more excessive than those.  Not to say that we will not continue the bearish move, however, I need additional confirmation.  A break of the lower trend line and a solid break of the 50 SMA on increased volume would convince me that this recent move is more than profit taking.  I think we will have a bounce this coming week, but we shall see.

The SPX has broken the lower trend line from last week.  I have redrawn another lower line this week that has three solid touches.  We must respect the trend line break as well as the break of the 50 day SMA.  The volume on the move this past week was not remarkable, so I will also need confirmation of the likelihood of a continuing move to the downside.  I feel that we will get a bounce this week in the index.

The COMPQ is currently testing the swing low from 10/2 at 2041.  There is some confluence from the swing high from 8/28.   The index clearly broke the lower trend line of the channel as well as the 50 SMA.  However, the volume was not convincing.  I feel that the double bottom may slow the move. 

Earnings season has been good for the most part.  We have a lot of economic news coming this week which could move the markets.  Stay on your toes and don’t fight the tape.  Robin

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