Saturday, March 22, 2008

Stockcharts.com weekly review

The long weekend saw a spate of buying, but can it continue into next week? The Stockcharters comment.

Dr. Joe
sees a correction in the Euro with room to run to the downside:


His weekly summary notes an S&P downgrade for the brokerages:


Too early to say what impact that will have on the futures. On this chart there looks to be a 'Buy' for the Dow:


Ted Burge has the PowerShares QQQ Trust (QQQQ) between support and resistance, although a rising trendline has been breached to the downside:


The point-n-figure chart for the Qs has a target of $48.43. It would take a drop to $40.89 to negate that:


However, interesting breakout in the Financial Select Sector SPDR (XLF). Note target of $35, part of Thursday's Triple Top Breakout:


On the other hand, the Gold Trust Shares (GLD) has a downward target of $84.96


Maurice Walker actually kept things relatively brief this week:

The last two candlesticks on the NASDAQ appear to be a Harami + pattern (1st chart below). It would not be considered an inside day because the second candlestick's shadow in the pattern is 2 points below the first day. Therefore, it cannot be a Three inside up pattern. But the pattern represents bullish sentiment. If the second day were an inside day (including shadows), then we would watch for a close above the first candlestick.

With a bullish Harami in place and favorable indicators on the indices daily charts, I continue expect a relief rally to bring about a new rising trend. We continue to bounce off the 2005 rising trendlines on the indice weekly charts (page 5). The monthy DJIA chart on that same page shows a solid rising trendline going back into 2004. I remain optimistic, that we will not encounter a bear market.

Commodities continue to break down. Crude broke its accelerated trendline and got a doji at its top (5th chart below), showing a lack of conviction going forward. The negative divergence on the WTIC chart marked the exact point that the correction began. Lets see if long term support holds in the days ahead. Falling oil prices should help the market.

Watch for the 5 day EMAs to rise above the 20 day SMAs on the averages. It will likely happen early next week. It also looks like we now have a sucessful backtest in place on the recent breakout of the bullish falling wedge pattern on the S&P 500's 60 minute chart (4th chart below). We are also watching for confirmation of the Morning Star reversal pattern, which would be a close above 1331 on the S&P and 2278 on the NASDAQ.


Richard Lehman sees has marked in new short term downtrends:

3/20 -- Today's move was surprisingly strong, particularly in the financials (What's up with THAT??) We can still be in a downward mini in a larger ST uptrend, but much higher and the downward mini will not fly. Looked more like short covering to me -- Monday morning should tell. Enjoy the three-day weekend from the market.

3/19 -- Raise your hands if you're truly surprised at today's action. You know that I'm not because I said yesterday to expect it. Yesterday's ebullience was emotional, not based on improving fundamentals. So the give back today was in keeping with recent experience. Moves like yesterday form legs of larger moves and cannot be sustained at their originating rate of ascent. SO we are back in mini-downtrends for the moment.

Now, this morning's highs gave us a point on which to draw new ST uptrend lines and you will see those on the charts. Since there is only one point on the lower line, we need a bottom in the next day or so to confirm these new upchannels. You can see where those bottoms should be. Even if confirmed, these new uptrends are very flat and very wide (lots of volatility). Expect that to continue for a bit.

3/18 -- That's two 400-point days thanks to a little panic, a sacrifical brokerage firm, and a benevolent Fed. Let's hope the Fed still has some ammunition left when the next shoe falls.

The upswing took a few charts into new possible short term upchannels, but we have yet to penetrate the longer term downtrends. Lots of things indicate a good interim bottom here though: Big spike and retracement in VIX; previous touches to lower channel lines; and gold retracing big time. This may continue, but when the opening leg of a move is this dramatic, there is follow-on volatility (i.e. a substantial pullback soon to create the new lower channel line). And there is sure to be some resistance from those larger downtrends.

Yong Pan has his weekly summary up, follow his link to get the charts.


He has a good comparison between the 2002 bottom:


and the current one:


Jack Chan has noted the breakdowns in the oil funds:


and Gold:


Finally, for fans of Howard Blackstein:


Have a good Easter


 
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