Sunday, October 08, 2006 Weekend commentary

Newsletter, Members Click HereWell, it was a week when the large caps [Dow and S&P] broke to new highs and (more importantly) were able to retain those highs. Also benefiting were small cap [Russell 2000] stocks which pushed past 735 resistance (5-month resistance) and held these levels into the weeks close. The tech averages [NASDAQ and NASDAQ 100] still have work to do to breach resistance, the semiconductor index struggled the most in the face of net gains for the markets - shaping a new, mini-downward channel out from the previously (larger) upward channel. However, in terms of relative market strength - Tech leads the way {Tech > Small Caps > Large caps = net bullish and strengthening}.

Technically, there was a fresh 'buy' trigger in the Russell 2000 and new highs in on-balance-volume for the Dow and S&P.

Market internals [$NASI, $NAA50 and $BPCOMPQ] were interesting because of their mixed messages; the $BPCOMPQ pushed beyond resistance of 48, reversing a 'sell' trigger in its Ultimate Oscillator - but not a similar trigger in its MACD. The $NAA50 looked ready to blast past 1,250 resistance, but again it has found trouble at this important resistance level - technically, it too remains weak. The $NASI regained the 5-day EMA and its Ultimate Oscillator found support at its Jun-Oct bullish divergence, but its MACD is on a 'sell' trigger which looks to be increasing in bearish strength. Finally, volatility is only a few ticks away from support at 16 (major support at 14). The volatility cat-in-the-bag was released in May and I suspect the period of low volatility which had been running from early 2003 is close to over.

For followers of the Ticker Sense Blogger Sentiment Poll, I remain bearish over the next 30-days.