Monday, July 17, 2006

Weekend Commentary from

Newsletter, Members Click Here Markets took another step downwards as the last remnants of technical strength in the S&P peeled away. Volume was less than Thursday's, either a reflection of complacency on the part of the bulls, or some measure of seller's exhaustion. With June lows holding in the S&P and Dow the former looks more probable. The Russell 2000 played the same game as large cap indices with only tech averages [NASDAQ and NASDAQ 100 ] at new closing lows. The semiconductor index escaped the worst of the selling as the index tested new channel support, although this has been suffering since it last made highs in February - unlike the other tech averages. If there is an average ready to lead to the upside it should be the semiconductor index - it's due a period of buying.

Tech market internals [$NASI, $NAA50 and $BPCOMPQ] continued their downward slide so assuming a bottom is not in place (although buyers should have the edge given the oversold condition of these internals) where can one expect the rot to stop? The Dow is on its second test of support at 10,700 - an important level looking at the point-n-figure chart; a push to 10,650 would register a breakdown and keep in play the latter chart's target of 10,200. The S&P has been holding a sharper ascent since late 2003 and it would take a move to 1,210 to register a breakdown, although the current point-n-figure chart target is 1,170. Prepare for an upcoming 'Death Cross' in the 50-day and 200-day MAs. The Russell 2000 has already initiated a downtrend on the point-n-figure chart and a fresh triple bottom breakdown was registered on July 11th. A 'Death Cross' looks likely to follow suit. The downside target is 615. The NASDAQ has an ugly downtrend in play on the point-n-figure chart with a double bottom breakdown registered on July 5th with a target of 1,860. The NASDAQ 100 registered a double bottom breakdown on July 10th and it has a target of 1,320. A 'Death Cross' was registered in June for both the NASDAQ and NASDAQ 100. The semiconductor index is some 25 points from its point-n-figure target of 384, part of its July 14th descending triple bottom breakdown.

Newsletter update:

Another wave of stop hits following Friday's selling. AKR was a Breakout play for July 6th. Low grade selling pushed it down to the stop price for a 4% loss. CSK suffered its third day of heavy selling, cutting below its 50 and 200-day MAs and into its stop for a 7% loss. An earlier June 2nd Subscriber play closed for a 1% loss. NAVR hit its stop on the very low of the day. The July 3rd Breakout play may find support at the 50-day MA, but it had lost the 200-day MA and stop price for a 13% loss. PPS reversed its July 12th Breakout to close with a 3% loss, but not before a February 2nd and June 30th Subscriber plays closed for a 11% gain and a 2% gain respectively. AMTD was a Subscriber play for June 15th. The stock failed to push above the 20-day MA and instead retraced back to prior lows and below to its stop price for a 7% loss. CBEY was unable to push its drive above $22.50 and broke below recent near term lows and the 40-week MA to hit its raised stop price for a 9% gain. DGX experienced accelerated losses but was able to finish Friday at the 50-day MA. Unfortunately, the June 28th Subscriber play ran through the stop for a 3% loss. HAUP was a long standing Subscriber play from May 15th. The stock traded sideways for much of the last couple of months, but eventually traded into the stop price for a 12% loss. HNAB experienced a solid period of selling throughout July. The last straw came on Friday's break of the 200-day MA and the June 15th Subscriber play closed for a 10% loss. LTM hit its stop on its third consecutive period of selling. The stock had breached the 50-day MA earlier during the week. The February 10th play closed for a 3% gain. PSS undercut support $24.50 support and the 50-day MA to close below its June 30th Subscriber play stop price. An earlier November 18th Subscriber play closed for a 14% gain, the latter June play for a 7% loss. RNAI finished Friday on a neutral doji on support, but the intraday action did enough to hit the July 12th Subscriber play stop for a 9% loss. VIMC didn't stall long enough at support as selling pressure dominated. The July 13th Subscriber play closed for a 7% loss.