Monday, October 30, 2006

Stockcharts.com: Weekly review

Techs made a brief move to new yearly highs, only to reverse by Friday's close. The breakout reversals won't help bulls, but there is plenty of support below.

Dr. Joe leads out with some commentary:

The DOW was slightly up for the week, but got hit Hard today. A bunch of Eco Data came out and it's conflicting and confusing.
For instance... 'Core Consumer Prices' (big inflation factor) increased 2.3% during the third quarter (that's bad?). No, it's Good, because it was down from 2.7% the second quarter. But it's Still Bad, because for the year it's Up to 2.4% which is higher than last year. Also Above the Fed Res' Comfort Zone of 1.5% to 2.0% max.
*The important 'GDP' came in low - 1.6% for the third quarter. Way Down from the 2.6% second quarter, causing skepticism about the bull continuing. However, 'Consumer Sentiment' increased from 92 to 96 - Very High.
Then Goldman Sachs stated that, 'The Demand for Mother Boards is falling off a cliff'. It's a continuation of conflicting data and the markets are reacting to every little news item. So, continue to expect sudden Ups, sudden Downs, and more 'Whopper Whip-Sawing'. (That's important to remember and expect, because you'll see it.)

He is watching a nicely spotted gravestone doji (also a "shooting star" because of the gap between Thursday and Friday). It would make for a nice top if there is a gap down on Monday:



He has also noted the positioning of the Nasdaq at resistance on oversold slow stochastics.



Robert New has the same chart as his lead chart.

While Henri Straetmans has an Elliot Wave version showing the larger picture. Note the upside target potential of 2,500:



Dr. Joe reflects on the Qs too:



Ted Burge has resistance in play, but bullish charts. He had this to say:

Oct 29th! I can't bear it, but I can show you that the SPX is at resistance. It is still demand and there is nothing bearish on these charts and even if there were, it wouldn't matter because we buy with support and sell with resistance. Price is KING, it is what we trade and it is what we analyze.

The major levels of support and resistance are in the call out boxes on the charts of the major indices. Sometimes the moves between targets is a 'heap' and this is why I publish intermediate targets integrated with major targets each evening on my site.

What I am showing you is a part of TA called support and resistance. As`far as I know, it is the only thing based on analysis of price that we can see in advance. If you know where there is support and resistance you can make a plan. Without it your post hoc analysis will probably confirm that support and reistance is where price activity usually changes.

His S&P chart says it clearly (note, it is a monthly chart):



Richard Lehman is more cautious in his appraisal:

10/28 -- While most of the bears are capitulating and the perma-bulls are looking for more cash to take advantage of Friday's dip, there are chinks developing in the armor that will tell us whether stocks are in for the kind of correction already documented in the real estate market (Barrons says if you bought a house after June 2005 you are most likely underwater!)

The small caps have pretty much flattened and the QQQQ is in the process of breaking its hourly channel to the downside. The mighty Dow will hit a critical support in its long-running and very well defined short term channel at 12,050. That's only a blink from where we are now.

At only 1.6% growth, there is at the very least cause for healthy debate on whether the housing break will take the rest of the economy into a recession. Right now, only the boldest institutional managers will start pulling out, lest they risk underperforming, but when the mainstream managers decide its time to pull gains off the table, they will all head for the exits at once.

The long term charts are so extended to channel tops that you'd need a parachute if they just cycled back to the lower end and remained in a long term, uptrend.

Ted has resistance in the Russell 2000 at 770; also note the false breakout:



Ted's Qs chart sits st support; very little room to maneuver (it too has a false breakout):



His Nasdaq chart is also a good one for indicating where support is - keep this one handy. Note the bearish divergence in the MACD histogram which has seen more frequent 'sell' triggers of late (including a new one from Friday, 1-week ago):



Robert New has an interesting chart of the Dow Transports, showing a bearish divergence in full stochastics and RSI as ths index approaches May-July resistance:



Matthew Frailey has a good Gold weekly chart tucked away on his list. Note how the 65-week MA has acted as support from 2002:



He also has a long term chart showing an additional support level:



Steven Swink is a regularly follower of precious metals and has the Gold & Silver Index at an accumulation level:



In summary - when will this market roll over? Weakness has been around for the last few weeks, but markets keep on rising. Precious metals look the best place to put money to work if you can't resist been in the market at some level.


 
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