Sunday, June 10, 2007

Stockcharts.com Weekly review

A busy week for the markets - what had the Stockcharters got to say about it?

Dr. Joe opens proceedings. He gave 4 reasons for the selling in the markets:

1. As you know, the stock market was way overdue for a correction of some kind, so that's what we're having now. (No doubt the bull is still intact for now)
2. Bernanke's comments this week had a negative influence.
3. Price of oil has been going back up and of course gasoline zooming.
4. Big Jump in Interest paid on long term treasuries - Over FIVE percent now. This means more money is going into bonds and less in stocks.

He is hinting towards Gold (although it closed the week down):


And has Transports at a potential Fibonacci support level:


The Dow also showing room for further upside as the Williams indicator works itself off oversold conditions:


Ted Burge leads with the Semiconductor index and its move from support to resistance (as defined by the 2 moving averages):


Although the Qs finished Friday above $46.78 support:



Matthew Frailey looks to have missed a signal on his NYSE High-low chart (although his last update was at the end of May - Chip, if you want to promote the top posters by making them 'Hall of Fame' you gotta make them post more regularly or else they lose the privilege). I'll do Matthew's job for him - 'buy' signal here?


Jack Chan has illustrated what on first appearances is a subtle 'sell' trigger for the Oil Services Holders:


and Energy Select SPDR:


But is there a back-test of former resistance (now support) by Friday's bullish hammer?


Robert New's 10-Year Treasury Note Yield looks to have signaled a breakout 'buy' (sell bonds - financials, utilities):


With the 20+ Year Treasury Bond Fund making an important test:


As I like to do, I will close with comments of Richard Lehman:

6/9 -- The charts are not yet offering a high-confidence channel scenario that tells me whether the major indices are now in legitimate short term downchannels or whether the upchannels have simply changed slope. The scenario shown on the 5-min Dow chart is one possibility - but the small caps do not offer the same interpretation. What we do know is that the former short term uptrends are broken.

My take is that we have an intermediate peak in place and that this initial sharp decline was the first leg down of a new downchannel. This is strongly supported by internal technicals (i.e. put-call ratios, breadth,VIX etc.)as well as seasonality. Consequently, we have most likely just bounced off the lower channel line of a new short term downchannel (as possibly depicted on this Dow chart). The upper channel line in this scenario would be parallel, so we have a tentative target - at least on the Dow, for the advance started Friday. If you are thinking now about how you can lock in profits and take some money off the table in your portfolio, try magnifying that thought by tens of thousands and see if you can figure out where we're going here.

6/7 -- I'd say the tide has certainly now turned. The mini channels accelerated on the downside and are now looking like full-fledged short term downchannels. The mentality exhibited today was typical of the herd instinct looking for an exit. What is scary is the thought that thousands upon thousands of investment managers will view this as an interim peak and want to take profits off the table -- all at once. I suspect it will get quite volatile but most certainly head further down in the coming weeks. Hopefully, soon, we'll get a low point that we can count on for the lower channel line.

6/6 -- The mini downchannels continued today in an orderly manner though in several cases widened or steepened. Most of this decline, however, remains contained at minichannel level except perhaps for the possible break in the short term Dow chart. The long term uptrends


Due to a public holiday in Hawaii on Monday there will be no blog or site updates until Tuesday (unless the market tanks!)




 
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