Saturday, March 01, 2008

Stockcharts.com weekly review

A horrible Friday sent shivers down the spines of bulls. How did the Stockcharters see it?

Ted Burge has a video available at www.thetedlines.com
Ted's words of wisdom:
When the 20 MA is gone as support it is resistance until proven otherwise. If you watch closely, the MACD will usually signal when price crosses the 20MA.

The TED LINES are objectively verifiable and they are NOT an accident. They are a solution based on price and NOT indicators. Get back to the future and get focused on price, because PRICE IS KING!

Point and Figure charts remove the noise. Look at 'WHERE' they told us to buy and then look at the TED LINES. It is not 'WHEN' to buy or sell it is 'WHERE' (on the chart) to buy or sell.

For the Q's Ted has support marked at $42.76:


Although the point-n-figure chart is aiming for $42.24 (which wouldn't violate January lows...)


The same was true for the Nasdaq and Nasdaq 100. The semiconductors are staring at 333.96 once more:


The interest in commodities helped push Richard Gosselin up the Stockchart rankings. But his charts of interest lie outside the scope of this research.

Joe Reed has his usual summary to kick the week off:


This is the first time I have seen this chart from Joe (contrary to what he says!). But the breakout is clear for Euro lovers.


Joe looks for the 4-year channel to hold as support in the Nasdaq:


But the best opportunity may be in the retail sector?


Maurice Walker dishes out another lengthy commentary:

The S&P 500's 5-minute chart, gave a timely sell signal last Wednesday as its rising trendline was violated (5th chart below), confirmed by a breakdown in the 14- period RSI below the value of 33.33. Which changed the mathematical ratio in favor of the Bears. The breakdown was quickly follow by a lower high and lower low.

The S&P 500's 15-minute chart confirmed the breakdown on Thursday ,with the a bearish crossover of the 10-,20-, and 50 period EMAs. Further erosion occurred when prices broke support at 1363, bringing about a 100 % retracement of the February 22nd lows.

On Thursday, I also noted that we got a bearish crossover of the 5-day Stochastic on the S&P 500's daily chart (2nd chart below). Which was confirmed by a bearish m-M-m pattern on the MACD histogram on the daily chart. That same day we formed a 3-day bearish Evening Star candlestick pattern on the daily chart, which was confirmed by Friday's price breakdown. The breakdown of the pattern occurs when prices fall below the low of the pattern. That patterns confirmation candlestick pierced through every possible trendline that has developed to the upside since the S&P's 1270 low. A trio of trendlines that had been maturing off the 1270 reference point on the daily chart (1st chart below), were trampled down and trodden under foot, as Friday's massacre slaughtered the long Brigade.

The Financial ETF (XLF) broke down from its minor trend (pg 2), while negative divergence is playing out in the Retail sector.

The Volatility index got a bounce earlier in the week off its 200 day MA, which was just above the 2007 rising trendline. The VIX broke out of its falling price channel Friday (7th chart below), which leaves the door open for a rise back to the upper part of a massive trend channel which formed over 2007. Thursday we saw the Stochastic breakout on the VIX confirmed by Friday's breakout on the price chart. This move has the potential to put the final nail in the coffin.

The Bermuda Triangle is a region in the northwest Atlantic Ocean, where disappearances of many aircraft and ships have taken place. Many of the disappearances have been linked with paranormal phenomena and clouded by mysterious circumstances. Some of the stories reported are highly questionable. But one thing is certain, that the disappearances took place somewhere in the abyss of the Triangle.

We have some Bermuda Triangles on the S&P 500's weekly chart right now (3rd chart below). Triangles that have the ability to make the bull market mysteriously disappear. The first is a Pennant, which was violated on Friday. The second, is a Descending Triangle that could have such bearish repercussions on the S&P 500, it could fall back to the 2006 low of 1219. Keep in mind that the S&P weekly chart is resting on its 2005 rising trendline, and if prices fall below the lower boundary of the Descending Triangle at 1310, it will have violated the 2005 trendline. If that occurs expect to test 1270 or 1219.

But even with the decline over the last two trading sessions, the S&P's weekly chart still managed to squeak out a rising histogram bar as the slope remains up. The Stochastic in that time frame appears to be forming positive divergence, so it will be interesting to see if the Descending Triangle pattern plays out.

With the breakdown of the Symmetrical Triangle on the S&P's daily chart we now have a lateral trading range in play, with support at 1310 and resistance at 1396 (4th chart below).

But if we do slip into a bear market then Shakespeare was right, when he wrote dialog from a play written long before men determined bear markets on a chart:

If it were done when 'tis done, then 'twere well
it were done quickly: if the assassination
could trammel up the consequence, and catch
with his surcease success; that but this blow
might be the be-all and the end-all here

Macbeth Act 1, scene 7

New video at thechartpatterntrader.com for 3/1/08

His 2-day RSI chart for the S&P is interesting - back inside oversold territory:


With the pennants a constant


His Volatility chart suggests more trouble ahead:


Although a major support test is underway in the S&P weekly


Richard Lehman chimes in. Considers short term misery a positive for the long term:

3/1 -- Welcome to Elliott Wave 5 down...finally. I knew it was out there just waiting in the wings. The bad news started to come out earlier in the week, but the crowd ignored it. On Friday, it finally dawnewd on everyone. The Dow and SPX went from upper ST channel lines to lower in one day and the SPX clearly even broke through the lower, ushering in a new ST downchannel. The small caps were already in ST downchannels from which they simply retreated off upper channel lines. The RUT is already in jeopardy of widening or accelerating downward from its existing downtrend.

The one-year charts give some perspective here. Wave 5s generally retest or set a new low, though they don't absolutely have to. The good news is that we're finally getting a possible set up for a more solid upswing, but we need to be patient while this plays out on the downside first.

2/28 -- Sobering news on the economy helped the main indexes to continue in mini downchannels. Of course, gold and oil ignored all that and continued their long rises. We may have peaked temporarily -- we'll have to see how these ST downchannels develop.

2/27 -- I adjusted the channels to accomodate the latest peaks and the new look says a number of indexes are getting toward (or already retreating from) short term peaks. Some charts still allow for uptrends to continue anpother couple of days, but watch the mninichannels to know when things have broken back downnward.

2/26 -- Clearly, some do believe we are all clear and are throwing money back into equities. The charts are breaking channels to the upside though mixed on degree of bullishness. The Dow and SPX have broken their downtrend lines from last October. That's important. But if you look at the RUT, it shows having simply hit its upper line and backed off. The one-year Dow chart shows a possible upper target for that index. I would take more stock in minis right now than larger channels.

Yong Pan has an excellent lead summary:


As he waits for a test of the declining channel in the S&P:


Another one to note the rarity of four down months in a row:


As a sidenote, his Nasdaq chart is suitably annotated:


For my last chart I will leave in the hands of Matthew Frailey. He has gone with a confirmed Bear market for the S&P:


 
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