Tuesday, November 28, 2006

Fallondpicks.com commentary

Newsletter, Members Click HereHardly a surprise to see the markets get hit after weeks of mini-gains. The degree of losses were a little startling but given this was the first day after the holiday it is a little early to say if today's actions sets the tone for the rest of the year.

The NASDAQ was hit with a 'sell' trigger in the MACD; confirming a new bearish divergence in this indicator, but is still able to hold the June-July bullish divergence (at least for now). In addition, the 2.2% loss on the day failed to break the bullish rising channel or the 20-day MA. There is a good chance of seeing support buying over the next few days. The NASDAQ 100 was a little stronger in that there was no MACD 'sell' trigger and at least for now no bearish divergence in this indicator. The semiconductor index fared the best (but was by far the weakest of the tech indices) as it maintained its break of the 200-day MA while holding reasonable technical strength. The Dow and S&P were less fortunate as each generated a 'sell' in their MACD trigger lines and sliced through their respective 20-day MAs, plus neither have MACD bullish divergence support to look forward too. In addition, the 5-month price channel of each index was breached to the downside. Large cap indices [Dow and S&P] look ugly if you are a bull.

The Russell 2000 suffered its own tough day, but roughed it enough to find support at its rising channel line and the 20-day MA. Technicals reversed to 'sell' triggers for the MACD, +DI/-DI and CCI - a greater level of technical damage than seen in other indices.

The tech market internals [$NASI, $NAA50 and $BPCOMPQ] were interesting in that there was little change in the $BPCOMPQ, but the $NAA50 played to an ever strengthening bearish picture (as led by the large bearish divergence in the MACD). There should be opportunities to bail individual stocks in the weeks ahead as the indicator suffers a plenty from whipsaw and is well placed to bounce after Monday's losses - but these opportunities should not be ignored (even if I have been harping a bearish stance since September 23rd). The 'calmer' $NASI was singing a similar tune as it gave a 'sell' trigger in its 5-day EMA, to butter up a larger 3-month bearish divergence in the MACD trigger line. Bulls will find cold comfort in this internals. Finally, volatility was singing the tune of a bounce off a declining wedge - a rise in fear looks on the cards and likely further downside.

Newsletter stockpick list update:

LEA featured as a Subscriber pick for April 19th and again for October 9th. It also featured as a Breakout for October 20th and November 13th. The two Subscriber plays closed for a 67% gain and a 35% gain respectively, while the two Breakouts closed for a 7% gain and a 5% loss. PSMT took it on the chin as it crashed through its 50-day MA to hit the November 16th Breakout stop price; the stock originally featured as a breakout for September 22nd. The latter play closed for a 15% gain, the former a 4% loss. USB failed to build on a breakout as it reversed through its 50-day MA. The stock first featured for Subscribers for March 16th, closing for an 8% gain (less dividends). It also featured as a Breakout for May 1st, September 15th, and November 17th - each play closing for a 6% gain, breakeven, and a 1% loss respectively. WMI featured twice for Subscribers; the first for September 12th and the second time for November 7th. After closing below its 50-day MA, the former play closed for an 11% gain, while the latter finished for a 1% loss. CYBS featured as a Subscriber pick for March 7th and again for September 14th; the stock drifted through its 200-day MA and into its raised stop to close the two positions for a 13% gain and a 13% loss.


 
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