Friday, August 18, 2006

From: Fallondpicks.com

** Partial updates until next Thursday for my Blog and Website. I am available to answer email queries from paid Subscribers **

Bulls just keep on rolling. Thursday's action was led by the break of dual channel resistance in the NASDAQ, to follow earlier breaks this week in the NASDAQ 100 and Dow. There was also a change in relative strength, as the Russell 2000 assumes leadership over the S&P {Tech Indices > Small Cap > Large cap}, shifting the money action in favor of more speculative issues - also bullish. Unlike previous attempts by market indices to rally, in which on-balance-volume has lagged, all the key indices trade above their 20-day EMA trigger. In addition, the NASDAQ 100 breached on-balance-volume resistance dating back to May.

Market internals [$NASI, $NAA50 and $BPCOMPQ] all look very healthy as the $BPCOMPQ followed the $NASI with its break of 3-month declining resistance. The $NAA50 pulled off its own trick, with a break of rising channel resistance. Market internals are at their best configuration for a bottom in 3-months, given the breaks of resistance. There should be some follow through (2-3 months) before market internals approach levels typical of an overbought market (expect the $NAA50 to lead in this regard).

Newsletter update:

RICK was a Breakout feature for July 31st. Intraday volatility was a step too far for the fixed stop as intraday lows whipped out the stop for a 17% loss (the stock was able to close above the 50-day MA). OPX was a Subscriber pick for July 3rd. The stock gapped below the 50-day and 200-day MAs to hit its stop price for a 7% loss. INDM suffered a volatile morning to knock out the August 16th stop for a 7%.


 
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