Saturday, February 09, 2008

Stockcharts.com Weekly Review

Dr. Joe kicks the week off with his summary:


Joe is marking a bottom for the Nasdaq:


He has an interesting chart showing the correction in Citigroup during the last recession. Look at the volume...


Even on the all-time chart:


The monthly Nasdaq is on a bullish percent watch:


Ted Burge has some important levels to watch in the Russell 2000:


and QQQQs:


Richard Lehman had this to say:

2/9 -- The big picture hasn't changed but the short term is really mixed. The larger trends are all still down and heading toward what should represent at least a retest of the former lows or even new lows. That may take a few weeks or more to develop though. Meanwhile, the major indices are getting there in their own ways. The short term mini channels are so unclear it appears the Dow is down, SPX is up, Naz, QQQQ, RUT and XLE up but almost at critical declining trend lines, XLF and XLK down. That says the short terms are almost anyone's guess right now.

2/7 -- Today's back and forth can be drawn two ways: as a widening of existing ST downchannels or as a new very small upchannel. I've drawn it both ways in different charts. Just remember the larger trend here is still down. QQQQ is already close to making a new low. They may all need to do that before a really good buying opportunity surfaces.

2/6 -- The short term trend gave you a chance to get in on the short side this morning before continuing. Everything is heading in the same direction with no breaks yet and the only question is whether we are just in mini channels or full channels downward. For the longer term, if you believe that we are in an Eliott 5th wave down, then you should expect we are most likely to set a new low before bottoming. A projection of the trends says that might not occur until at least mid March.

2/5 -- The rollover caught a tailwind from the service sector news today and turned into a rout. If you followed the warnings of the Dow and SPX 1-year chartgs that I've pointed to, you would have been short, or at least on the sidelines. We are now in short term downchannels across the board, but can't even draw them yet since we haven't had any kind of countertrend rally yet.

Maurice Walker had another lengthy commentary piece, follow his link to get the full picture with charts:

2/9 Commentary: In the last 3 weeks the transports regained over 50 % of the price loss since the August high of 5487 (daily chart pg 2). But the Transports are now reversing of declining trendline of resistance as they approach the 61.8 Fibonacci retracement at 4931. The Transports have now formed a continuation Symmetrical Triangle angle on the 60 minute chart (pg 3), which means prices could move either way. The Transport weekly chart could be setting up a huge H & S top pattern (bottom of page 3).

The S&P 500 did get a lower histogram for the week , but the bar still remains higher than the one made 2 weeks ago when we saw the most recent 1270 low being put in. Despite the price reversal for the week, we saw the weekly chart Stochastic break above its downtrend. The prior week the Stochastic got a bullish crossover. And once again, prices also successfully tested the rising trendline on the S&P weekly chart this past week. I do expect the market to attempt a recovery, but if fail to move above key resistance (falling trendlines and Fibonacci retracements), then the bears may get the answer to their prayers. However, the end of 2008 looks good for the economy and we could just be factoring in low GDP figures into the market at this time.

The Advance-Decline line which reveals market breadth, is endeavoring to chisel out a new rising trendline (8th chart below). Declining issues out number advancing issues by a 3 to 2 ratio on the NYSE.

The 1576 all time high Fibonacci retracements on the S&P 500 are potential areas of resistance. The 50 % and 61.8 % come in @ 1423 and 1459. Ironically, both Fibonacci numbers intersect with two declining trendlines that have the ability to become long term falling trend channels (see 1 chart below). If a bear market is emerging, prices will have great difficulty rising above those areas. Also prices usually fail to rise above the 200 day EMA during a bear market, which is currently at 1449.

It looks like we are forming a W (Double Bottom) pattern on the S&P 500 (4 chart below) and on the Nasdaq (see 60 minute chart on page 3). The 5 day Stochastic plotted behind the daily S&P 500, has been remarkably accurate in calling the minor tops and bottoms since the summer. It has now enter oversold levels again. Therefore, I would expect the %K line to get a bullish cross above the % D line on the 5 day Stochastic (6th chart below). Study the 15 and 60 minute charts on pages 2 and 3, and you will notice that they are now setting up bullish divergences.

This is the worst week performance since March of 2003 on the DJIA. The DJIA is down 8.16 for the year, the S&P 500 is down 9.33, and the Nasdaq lost 14.9 year to date. Volatility continues to bring about huge price swings. Which means that it has been a traders market, buying the dips and selling the rally.

Crude oil is now going to move higher with positive divergence in place and bouncing of the rising trendline of it's daily chart. I closed my short position and went long for the short-term on USO (see crude oil chart pg 5).

Elliott wave patterns could either be in a new 1-5 wave push higher or an abc bear rally back to the 50 % Fibonacci retracements of 1423 on the S&P and 12,916 on the DJIA.. If we only develop 3 waves up on the next push higher, it is likely setting a huge wave B. With wave A being from 1576 to 1270 on the S&P and 14,198 to 11,634 on the DJIA. Those moves were an abc 5-3-5 move within themselfs (see 2nd chart down). Keep in mind that there are various bullish and bearish counts, and Elliott Wave counts are constantly subject to revision. But its always fun to try and solve a good mystery. So the short term outlook is bullish as oscillators on the daily index charts have now had a chance to reset.

The British economist John Maynard Keynes lived from 1883-1946. Keynes was the first to purpose that when an economy is sluggish, that the Government should become proactive with Fiscal policy as the government attempts to influence the direction of the economy through changes in government spending or taxes.

Now the current administration has adopted a Keynesian economic approach in regards to the tax rebate package. Tax rebates will be given in order to stimulate the economy through spending. Keynes taught us, in order for government to end a recession or depression, it must increase spending in order to induce more production and put the unemployed back to work. He also believed in taking this approach in order to prevent recession.

Based on the slippage on the recent payroll surveys, that is exactly what government is attempting to do.

The fiscal package is a Keynesian approach to our current economic crisis. The fiscal package will include several proactive fiscal measures to give a shot in the arm to the economy.

The fiscal package will include:

1. rebate checks to the middle class.

2. A provision to allow Freddie Mac and Fannie Mae to buy larger mortgages providing relief to housing market by buying the higher mortgages.

3. Business can make larger purchases in 2008 with huge tax incentives.

Not only that but the Federal Reserve is actively lowering rates in order to solve the stress in the credit markets.

Here is his S&P chart:


Robert New is looking for 3-year support to hold:


New Kid on the Block, Yong Pan is looking for a repeat of the 2002/2003 bottom:


Interesting volume ratio chart for the S&P - no bottom yet?





 
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