Sunday, October 29, 2006

Weekend Commentary from Fallondpicks.com

Newsletter, Members Click HereBears will have sighed some relief as Thursday's breakouts in the tech averages [NASDAQ and NASDAQ 100] reversed; the NASDAQ 100 suffering the additional indignation of a distribution day. Reversals were also experienced in large cap [Dow and S&P] and small cap [Russell 2000] indices, but neither set of losses caused any significant technical damage. There is a swathe of support to look forward too - so Bears can't be rubbing their hands with the expectation of a big reversal, but buying this dip would be a risky proposition. The semiconductor index took a step back to its 50-day MA; there is a big void of support down to July lows, so further losses could be very damaging technically. The semiconductor index is also influenced by the strengthening bearish divergence of its MACD trigger line.

Technically; the MACD trigger 'sell' holds for the NASDAQ and NASDAQ 100 - but there is no change in the other technicals; the bullish divergence in the MACD of the Dow was broken by the sideways movement of the indicator, but no 'sell' trigger yet; the Russell 2000 holds to its 'sell' trigger in CCI, but its MACD is holding to its bullish form.

The only change in the tech market internals [$NASI, $NAA50 and $BPCOMPQ] came with the bearish cross of the 5-day EMA of the $NAA50. This has started a negative divergence to the parent tech indices [NASDAQ and NASDAQ 100]; a lower low runs in contrast to the higher high made in the tech indices [NASDAQ and NASDAQ 100].

Since turning bearish for October I have advocated selling into strength, letting the next downward leg play out before looking for new long positions. I remain bearish for the Ticker Sense Blogger Sentiment Poll (since September 23rd) - although this is the second week I have been on the wrong side of the call; a 92 point gain for the NASDAQ and a 411 point gain for the Dow since the close of business on September 29th. Ticker Sense will be publishing bullish/bearish sentiment for each of its contributing bloggers on Monday. It will make for interesting viewing (for those willing to disclose this information).

Newsletter update:

LVLT reversed its breakout to cut below $5.48 support and hit its October 18th stop price for a 12% loss. JADE hit its higher October 19th stop price for a 2% loss; the October 4th Subscriber pick closed for a 10% gain. BITS gave up its October 27th Subscriber stop price to close out the two earlier positions; the September 22nd Breakout play for a 35% gain and the October 13th Subscriber play for an 18% gain; the Thursday Subscriber play closed for a 1% loss.


 
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