Archive for the ‘The Week That Was’ Category
The Week That Was: 10/19-23/2009
October 24th, 2009 | 
Author: The DOW is currently In a box between 9917 and 10118. The RSI, Stochastics and the MACD are pointing down. Volume has been unremarkable. We are at the top end of the Bollinger Bands as well as the broadening trend line channel. The market appears to be very indecisive. I will just wait and follow where it wants to go. We are at significant resistance from 1999- 2001 and 2004 and 2005.
The SPX is a carbon copy of the DOW. Long term resistance resides at current levels from 2001 and 2004 and 2005.
The COMPQ is at the top end of the Bollinger Bands about mid channel and very indecisive on average volume.
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The Week That Was: 10/12-16/2009
The DOW moved through the recent swing high at 9918 from 9/23 to challenge significant resistance from the relatively flat market action from 2004 (see 20 year monthly chart). There is also very stout resistance from 5/1999 through 6/2001. The next 1000 points on the upside in the Dow will be difficult to achieve due to the large amount of trading activity at these levels. The Short term chart reveals that the index moved up to the top end of the Broadening Bullish Trendline Channel that was pointed out last week. Friday’s action printed an almost perfect bearish engulfing pattern on increased volume which bodes for a move back down to recent support levels. Support resides at 9918, 9834, 9496 and 9430. The 50 SMA may also act as support at around 9550 if and when the index gets there.
The SPX is testing the “shelf” from 2004 as well as the swing low from March 2001 (see 20 year monthly chart). The index moved up close to testing the upper trend Line from last week’s chart and very close to my projected move to 1080. The index formed in a bearish candle on increased volume. We are likely going down to test support at the swing high from 9/23 at 1080 and the gap from 10/13-14. The next downside target is at 1040 and then 1020.
The COMPQ is displaying some weakness at this level putting in two narrow range trading days followed by a “Hanging Man” candlestick. Look for a small pullback or at best some sideways trading this week. Some major tech companies are reporting this week beginning with AAPL on Monday. If the reports are favorable it may negate what the charts are showing us now and push higher. Follow the market but stay hedged. Support resides at 2143, 2128, 2085, 2059 and 2040. The 50 SMA may also provide support at 2050 if and when the index gets there.
The Week That Was: 10/5-9/2009
Last week I said that the hammer candlestick pattern at the trendline on 10/2 would likely hold, which is precisely what it did. The index moved up nicely to challenge the Bull Flag from 9/17-21. My concern for the continuing strength of the bullish move is that we are in a “Broadening Trendline Channel” on decreasing volume which is somewhat indicative of a tiring move. We also have a bearish MACD divergence which further confirms a lack of conviction to drive the market higher. I am still bullish but hedged.
The SPX held at the 10/2 Hammer at the lower trendline as I had predicted that it would. The index then moved up to settle at 1071, one point higher than my projected target at 1070. I continue to be bullish but hedged due to the “Broadening Trendline Channel” and the “Bearish MACD Divergence”.
The COMPQ is solidly in a classic “Bullish Channel”. Last week I projected that the inverted candle from 10/2 would result in a bullish move off of the trendline and that is exactly what happened. There is a slight reduction in the volume the last few days and we have a “Bearish MACD Divergence” so I remain bullish but hedged.
My feeling is that we will continue higher into the end of the year and possibly through January with the seasonality of retail season as well as the “January Effect” with small cap and value stocks typically bullish. After that, it is anyone’s guess. Come on over to www.markettamer.com and learn to trade profitably. Best, Robin
The Week That Was: 9/28-10/2/2009
If upcoming earnings season confirms that stocks are meeting their numbers and guidance is not too terrible, we should continue to power higher through the end of the year. After that, it is anybody’s guess. There are still massive amounts of institutional dollars that have not participated in this amazing run from the March lows and time is running out for them to be a part of the game. For that reason alone I feel that we will continue the push higher into the end of the year as fund managers try to show some positive results.
Seasonally, we are also coming into retail time. Not many are expecting retailers to do well with unemployment at record levels and continuing issues in Residential Real Estate. However, we are a consumer driven society and there may be pent up demand to “buy something”. It will be interesting to see if we see a “less bad” November and December. We could have just an average retail season and still have the market finish higher into the end of the year.
The Week That Was: 9/21-25/2009
The markets have finally pulled back as many had anticipated. The question one must ask is whether this is the beginning of a larger market correction. My feeling is that this is nothing more than a healthy and normal pullback on profit taking. As levels become even more attractive to institutional investors, they will enter and push the market higher into the end of the year.
It is prudent to hedge the downside on the continuing move to the upside because one never knows if and when a larger correction may occur. However, with that said, I feel that more market participation will occur as measured by increased volume into the end of the year.
Defined risk strategies such as Long Calls, Married Puts and even Bull Puts can optimize the continued move to the upside. Broad based ETFs like the QQQQ, SPY and DIA can offer diversification, massive liquidity and reduced company risk if you choose to participate. Make sure that you do your own due diligence and proper portfolio and risk management is in place. Consider consulting your financial advisor before putting money at risk.
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The Week That Was: 9/14-18/2009
I had anticipated the DOW staying within the recent trading range this past week and it didn’t cooperate. It just goes to show you that the market is going to do what the market wants to do. Friday 9/11 printed a Spinning Top and a Bearish Harami which was followed by a Hanging Man at a Double Top. Under most circumstances, the aforementioned confluence of indicators would have resulted in a bearish to flat market.
The fortitude of this market is remarkable. One of the thesis that I have ascribed to for the run into the end of the year is that there are some institutional investors that have missed a good portion of the move from March and they must show positive results or they will be sweeping floors and not managing a fund any longer. There are still trillions of dollars sitting on the sidelines. Much of this money is wrestling with coming to the party late. If that money decides to get back in the game, we will have an explosive move into the end of the year.
In the meantime, I will pay very close attention to the volume and the reaction of the market at key levels of resistance and support as my indication as to where we are going from here. Following is my chart analysis on the markets. Best Robin
The Week That Was: 9/7-11/2009
The DOW is at an inflection point with some fairly strong resistance. The index is likely to move back down into the trading range this week. We moved up as I suggested would happen as indicated in my post from last week. My target was 9630 and we had a closing high of 9627 on Thursday 9/10. I felt we had a chance to break above 9630 but it was not to be. It was a shortened trading week after the Labor Day holiday and I expected more volume than what we got. There doesn’t seem to be more conviction to drive the market higher at the moment. I expect that we may be range bound for the short term. The range is 9253 to 9650. Should the index break below 9253 I will begin to lighten up on my long positions and then look to 9117 as a key area of support.
The SPX finished the week at 1042 and my post from 9/5 projected a finish at 1039. The index printed a Spinning Top and a Bearish Harami to close the week. I feel that we will trade back down into the recent trading range in the near term. We need more market participation in order to drive the index above recent highs. Look for 1044-48 on the upside as immediate resistance and 1016 and 992 as support on the downside.
As has consistently been the case since the March lows, the COMPQ has outperformed the DOW and the SPX and been the leader. This week has not been an exception. I called for a bullish move this past week and felt that the index would challenge the recent high at 2059. The COMPQ exceeded that level to finish the week at 2081. Friday formed a Spinning Top/Bearish Harami and as a consequence we could see some bearish activity in the beginning of the coming week. I am not sure that it will be anything more than a brief respite. We will just see how it plays out. Look for the upside resistance to be 2089 and then 2211. The downside support resides at 2059, 1993 and 1958.
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