Sunday, May 13, 2007 Weekly review

It was a week for ups and downs, but in the end there was little net change. How did the Stockcharters see it?

First off, Richard Crockett's StockTiger stock pick list has over double the number of hits of its nearest rival (George Zimmerman - an unusual visitor to the busy end of the field, especially given his 10000 hits is supported by a meagre 16 votes). It is unusual to see Richard's list so far ahead on the hit front.

Joe Reed hasn't been updating his "near 100% accurate indicators" (a claim I think he has now removed from his list). It looks from my read of his Dow chart that a technical 'sell' was given for both Full stochastics and Wm%R:

Although he has illustrated a likely top for the Oil Index:

Ted Burge has noted a return to resistance:
May 11th! From support of the 20 MA back to resistance at the TED LINE! RESISTANCE at the TED lines on Friday is a fact!

Same goes for the semiconductors:

Mitchell Meana has gone for a clear "Sell" for the Diamonds (DIA):

And has raised the upside target for the Nasdaq 100 to 1,914 from 1,892:

Robert New has drawn a broadening wedge for his 2-year Nasdaq chart. Note the presence of nearby resistance in each:

and Nasdaq 100:

But I think his Small cap chart is most interesting. The comparison in the trading action to this time last year is telling. A move to long term rising support looks favored:

Maurice Walker had this to say about the markets:
5/12 Commentary: A trend is a trend until it isn't, so the technical saying goes. But that doesn't always work out in a perfect world. The advancing accelerating trendline on the Dow was violated last Thursday (see 2nd chart directly below). If this trendline has truly experienced violation, and the advance has come to a conclusion we will know it very soon. In order for the trendline to have authority, prices must not rise above to resume the advance. The trendline should act as resistance on any backtest. Volume trends should increase as we look for signs of selling as profit takers come into the market.

Technical Analysis has certain rules and criteria that must be met in order to maintain standards. One rule is the 2 day rule on any trend violation. In order to give validity to the penetration, technicians look for a close of at least two days below the broken trendline in order to establish a breakdown. This rule is not set in stone, and sometimes it is necessary to redraw a trendline if a recovery occurs. Friday we had our 2nd close below the trendline so it will be interesting to see if the breakdown continues to be confirmed. If it is we can expect a test to the intermediate trendline in the current trend channel on the Dow's daily chart.

Once a trendline violation has been confirmed, we want to see lower highs and lower lows in place with declining moving averages.

The Nasdaq & SP 500 are both backtesting to the breakdown in their Rising Wedges on the 60 minute charts.

Watch the new video at the blog for 5-11-07, with more to come this weekend.

His list features numerous charts, some of which focus in greater detail on the broadening wedge in the Nasdaq:

With another good one for oil:

Jack Chan has gone with a "Sell" (trendline break) for the Energy Select Sector SPDR (XLE):

Although Energy Services are performing strongly:

With no change for his gold indices (which is still bearish).

The Stockcharters have stuck to their bearish guns (a contrarian indicator?) and will eventually be 'right' - the question is when?