Monday, September 15, 2008

Weekly review of Stock Charts

Well - I think Monday will be a down day, but is there anything to add from the Stockchart.com ers from last week?

Yong Pan headed the list with an interesting mix of 3 neutral signals and 5 bearish ones. The prior bullish signals disappearing into the wind.


Interesting to see the VIX relatively overbought even after 2-days of gains. Monday should see the VIX spike higher but maybe Monday will also be a gap down and rally???? Hard to say until the first 30 minutes of trading play out and a playing field is set.


This second chart isn't so good for bulls; note CPC and percentage of stocks above 50-day MA:


Will the S&P reach lower channel support (c1,160)?


Maurice Walker had talked of this on Thursday:

That push lower on the Qs, finetuned the divergence on the 60-minute chart and allowed the MACD in that timeframe to break its down trend. We are extremely oversold here and I expect the divergence between the MACD, RSI and the price chart to play out. Now that the MACD downtrend has been broken, we should see prices advance causing the MACD to move above the zero line. I expect the rally to continue tomorrow and Monday. It could continue into the early part of next week. If Lehman Brothers works out a deal over the weekend the market would likely react positively on Monday.

Maybe opening weakness will prove to be a 'buy'? Note divergence in VIX 60-min (another bullish sign):


On first reading this sounds ridiculous based on action in the Futures, but it might not sound that crazy in the end:

I know of some fund managers who are warning friends to get out of the market, because they believe it is about to tank. At this point, I believe we will churn sideways after this rally as we continue to test the July 15 lows.

The 60-min Qs for reference:


Joe is just missing one item from his weekly summary...


His chart of oil shows nice support:


The Gold Index lost one support level only to stall at another:


But long term trend breaks are a problem:



Ted Burge has the dollar rally on a breather given the tight bands of resistance:


Richard Lehman's channels will make for interesting viewing today. Here are his comments from the weekend - note, he sees a buying opportunity:

9/14 -- ALERT!! Sep 15 will go down in the history books as the day two financial legends become history. If the market tumbles (futures tonight say it could be down 200-300 points on the Dow), it could set up a BIG buy opportunity like the low after Bear Stearns and the low on Fannie/Freddie Day. If we get a VIX up to 30 or so and are down substantially, that would be a good climactic spike.

9/13 -- All eyes are on the brothers Lehman.(They actually once told me I couldn't work there because of my name -- might give people the impression I was an owner!) We all know it will not be allowed to just fail, because it could start a chain reaction, but it will not quite get the same treatment as Bear Stearns either. So will the market feel the gov't came to the rescue and rally like it did in March and April?? I think not. We're all beginning to get the message that this is not over yet and that the Fed can't backstop everything. But the initial reaction could be dramatic because of all the big bets placed on both sides.

So, to the charts...We are having countertrend rallies within downchannels on the short term charts and there is room for a bit more on the upside if people believe the news Monday will be worth celebrating. But then we will hit a bunch of downtrend lines again very shortly (Dow:11,625 and SPX:762), and they should strongly resist too much happiness. Breaking those lines will be necesary for further possible upside. I would actually prefer to see a scenario where we sell off big time down to the lows on the long term charts with VIX spiking to 30+. THAT might be the buying opportunity of the year...but it isn't happening just yet.

Good trading...



Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website
 
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