Sunday, February 03, 2008

Stockcharts.com Weekly Review

It was a busy week for the markets with the Fed, Google earnings and the little deal of MSFT's. How was this reflected in the markets?

Joe Reed has his week in summary:


Joe's Nasdaq chart shows the bounce off four year channel support:


I hadn't realized Gold ascended as much as it had relative to the decline in the dollar; Joe's chart shows the relationship well:


The monthly Dow chart shows a picture perfect test of support


Ted noted the change in the semiconductors
Feb 1st 3:50P.M. There are now 14 of 19 components of the SOX that have moved to X's.


With the volatility chart for the semiconductors showing a (very) bearish target:


Maurice has another lengthy weekly commentary review up. My emphasis is in bold:

This weeks exciting excursion saw the DJIA up by 4.39 %, the S&P 500 rose 4.87 %, and the NASDAQ climbed 3.75 %. Prices managed to reset the table here, and break above the August lows this week. As we Finally got a Friday closing to the upside as traders felt comfortable enough to hold positions over the weekend. Prices closed above the 20 day EMAs, which shows that buyers are back in control. The Transposrts even had a breakout of its long term downtrend line with Friday's push higher.

If you watch the weekly charts (page 3), it should be fairly transparent and obvious at this point that a price surge is been under way, as traders continue to bid market prices higher. Putting the technical pieces together we have a vantage point in viewing multiple time frames. The weekly index charts all got an closing uptick for the week in their MACD-Histograms as the weekly Stochastics got bullish crossovers and still have low values in the 20's. While simultaneously the daily charts produced bullish crossovers on their MACDs and rising Histograms. As the 60 minute charts broke their downtrends and produced a higher low and a higher high.

This week the daily indices got bullish crossovers on their MACDs. The daily DJIA and S&P 500 charts got bullish double crossovers of the 5 day EMAs intersecting with the 20 day SMAs.

Last Thursday, we got a confirmed BOSO (buying overbought/selling oversold) signal on the 60 minute SPY chart (2nd chart below), as prices moved above the January 25th high. At that same time we saw additional bullish signals as the Stochastic become newly overbought followed by a bullish realignment and breakout of the 10-, 20-, and 50-period EMAs. The hourly charts revealed the moment the bottom came on the SPY, as positive divergence set up on the Histogram on Jan. 22, shortly after the announcement of the rate cut. From there downside momentum ceased for the bears, allowing the bulls to take back the reigns of control for moment.

The Dept. of Labor released the jobs report on Friday, which showed a loss of -17 K jobs in January. However, the merger news between Microsoft and Yahoo offset a weak jobs report. The nonfarm payrolls reflected a significant loss in government jobs, while private payrolls remained unchanged. I might have more to say about the jobs report after I finish examining it this weekend.

The daily VIX is resting on its 50 day MA. It got a bearish crossover on its daily MACD. It's weekly chart continues to show unfavorable signs on many technical indicators, so that it may give the market a reprieve from the profuse affliction that it has suffered during the last several weeks. The short term foreseeable future looks upbeat, but the market can only curry favor for so long until a trend runs out. The question here is do we have enough traction for the long haul. However, keep in mind that the markets always look to the performance going forward not backward. Personally, that is why I continue to believe that we are in correction rather than a bear market. And besides that the bears are premature in declaring a bear market, until we see how the monthly charts unfold after the next rally.

But think about it, most all of the economic data that the market was fearing, it got last week and the news didn't stifle the run. Sooner or later we will get to the defining issue, which is will we rise to make a new all time high on the S&P 500. Because if we don't, we may have to tolerate another bite of the bearish apple.

His S&P charts show this nicely:




1/22 We could be witnessing the making of an inverse H & S pattern with a neckline near the 1523 area. If this plays out we could now form the right side of the Head and then form another shoulder. This pattern would take many months to develop, and by the time this continuation pattern played out (approximately 5 months) the economy would be getting better GDP in the second half of the year.

The inching channel breakout in the Transports:


Richard Lehman points to the negativity and is remaining cautious.

2/2 -- The indices continue upward for the most part in existing ST upchannels. The Dow, SPX and RUT, however are hitting downtrend lines from the 1-year and 3-year charts. It pays to remember where we are in the bigger picture. To quote Alan Abelson in Barrons this weekend:
'As we noted last week, what we're seeing is a typical bear-market rally, predictably paced by the very stocks -- home builders, financials and the like -- that spearheaded the big plunge. The action is much more reflective of sellers' fatigue -- strenuous unloading of big positions can tire out even the most dedicated dumper -- than any intimation of a turn.

Indeed, as the estimable David Rosenberg of Merrill Lynch...points out, in the 2000-2002 bear market, there were no fewer than 16 rallies of at least 5% in the S&P, each lasting on average about a month, and no fewer than 35 bounces of 5% or more in the Nasdaq (which still managed to wind up losing nearly 80% of its value). The investment byword remains don't buy the rally (rather, sell it). And stay defensive. This bear market is nowhere near over.'

1/31 -- Despite what looks like nonsense action, the charts are now very much in synch in the short term, and the entire swing today (450 points on the Dow!!!) was contained perfectly inside existing short term channels. The strong bounce from recent lows has flattened into much less steep uptrends or almost sideways channels. Some look like they want to reaccelerate upward, but nothing has broken out yet. The XLF is close and may be the one to watch to see if it accelerates upward. Meanwhile, there was a lot of negative news on the economic front, so I wouldn't be figuring we're out of the woods by any stretch. Keep your eye on long term downchannels for places to go short again.

His Dow chart sets the tone:


Robert New, like Joe Reed, points to long term support


Although stretching the chart a little further would appear to suggest otherwise:


Matthew Frailey has clearly gone with a bear market:


His chart of New Lows and the Nasdaq makes for good viewing:


As does his projection for the S&P


Interesting times...

 
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