Sunday, October 22, 2006

Stockcharts.com: Weekly review

The Dow hit the magical 12K. Tech indices are challenging May highs. Small caps continue to improve. How do things look for next week?

Joe Reed noted RSI fast approaching 70 in the Dow; a previous marker for tops in 2000 and more recently in May 2006:



His opinion is posted to the following chart. If he wants to claim "Near 100% Perfect Indicators" he would need to be more decisive than he is here... Top - Yes or No, Joe?



Rodney Gorchinsky has gone with shorting a number of Dow components. He had this to say:

Oct 20/06
4:30pm: At the close, we shorted: EMC, STX, AMD, MMM, CAT, HD, WMT, FRE, TGT and PFE in the NYMT Fund. The Zenit website has all the numbers you need to know (prices and shares). Thank you for your kind emails and valued votes. Have a great weekend.

Noon: We will be playing 12,020 as a major resistance and 11,750 as a major support on all time cycles, as well as the necessity for the Architects to close at an attractive neutral level on option expiration day. Therefore, we will be shorting this market at the close. Please stand-by for your alert emails.

9:00am: Good morning. After analyzing all of our data last night, we have concluded that the markets have reached a pivotal point in time with the 19th anniversary of the 1987 Stock Market Crash and the Dow closing above 12,000 both taking place on Thursday. In addition, despite the regular daily FED cash pumping, REPO's tailored for Nov 2/06 and the US Election on Nov 7/06, we have concluded we will begin our shorting process as of today. We wish to reserve the right to confirm this at Noon. Therefore, please stand-by for more information at that time.

His Intraday Dow chart points to a blowoff top in the Dow:



Richard Lehman is less concerned of an immediate top, but views the Dow as vulnerable. He had this to say:

10/21 - The short term advances on the large caps are still in place, making them the longest I've seen in years. Despite slope changes, they continue rising and are quite well defined. But their exceptional duration has now brought both the Dow and S&P to the upper lines of one-year (and SPX also to three-year lines). That says these indices are now quite vulnerable in the one-year perspective.

The small caps are still essentially in uptrends, but are now showing that they cannot sustain the pace on their 40-day charts and are flattening. They could also easily test support in their one-year trend channels (the steep ones that began in July) before long. (The QQQQ would test at around 41.50)

There is no doubt that things are unusually toppy, but how and when that will turn into declines is still unclear. It looks as if our clue will come from the small caps first.



Going back to Joe, he is also pointing to a potential top in the Nasdaq:



But a bottom in Oil:



Mitchell Meana shows an 18-day cycle of corrections in the Nasdaq 100; has the index completed its lates 18-day cycle? Looks like it from here (but note new reaction lows in slow stochatics [21,4], which suggests a bearish divergence and an end to this run sooner, rather than later):



Robert New is looking for a pullback in the Nasdaq to the 50/20 day MAs as the Semiconductor index hits against former support (now resistance).



He is watching for a cup-and-handle pattern in the Nasdaq



With potential for upside into the 2,900 area



He has pushed this chart on the Nasdaq 100 to his 'page 2', but its worth looking at (large triangle in play):



Robert continues with his bullish outlook on Oil too:



Ted Burge opens with an interesting statement; he is seeing supply starting to nose into the picture:

Oct 21th! SCANS and SCAMS are somewhat different. Scans are based on facts and tell us that 25% of the components of the DOW, OEX, NDX, SP400, SP500 and SP600 have moved below the 20 DMA in the last 3 days. This is not a prediction, it is a fact and unless you think 25% of the stocks in these indices can recover 'real quick', we are looking at another indicator of supply (resistance) taking control.

If you think the SOX is a leader you may want to see where price is relative to support. It is on this list and on the front page of my site at www.tic-tac-dough.com

The support and resistance report for the components of the SOX has been updated . It is called SOX components, and the new support and resistance levels are highlighted in blue.

Major targets of support and resistance do not change and have an inherent margin of error of 1/2 of one percent.

The targets for intra-day and swing trading are adjusted for volatility as this is reality as with options that must be a part of analysis.

His Semiconductor index chart says it all:



His point-n-figure chart for the same index brings little comfort either:



Given the potential for a rally in oil - Ted is taking a more bearish view on the Energy Sector based on the bullish percents:



But he is not all doom-and-gloom. Check out his Gold and Silver Index ($XAU) monthly chart. Good support on dips below 130 (but holding 120):



Although in the short term, Jack Chan has a nice chart showing the support line and probable resistance at the 50/200-day MAs:



What is the take home message? Prepare for a retracement in the market indices. Look for a bounce in Oil, but stay away from Energy stocks. Best rewards could come from the "relative" safety of precious metal stocks.


 
f9229fcfd1b1390be00cfccc86c90349c93a4179bf4227457c