Monday, July 13, 2009

Weekly Stock Charts review from Publishers

Earnings season continues this week but other than one bad day it was a quiet week for the markets. What may happen this week?

Yong Pan of Cobrasmarketview leads with a continued neutral picture in the short term and a mix of neutral-to-bearish over the intermediate term:

Yong has a downside target of $81.04 on the SPY as part of the head-and-shoulder breakdown

But is the S&P digging in at a support level?

Anthony Caldaro of ObjectiveElliotWave has the AB of the 'ABC' in place for the S&P which either means a flat ('C' = 'A') or zig-zag (i.e. a new low wher 'C' < 'A') move in the months ahead

Richard Lehman shows channels working off lower tests which will either bounce higher for a couple of weeks or acclerate lower.

7/11 -- Friday's action may have seemed dull and non-committal, but it did provide important info on the 5-minute charts. We now have evidence of blue upward minichannels. They are most pronounced on the small caps, but can also be drawn on the Dow and SPX. More importantly, they are flat and weak so far, raising questions about whether they can sustain a move back toward the upper purples. Since the purples were pushed downward by the red minis recently, and remain the dominant channels, we are likely to see further downside before long and there is even a risk of acelerating downward. We are seeing the realization by investors that maybe things aren't quite as rosy as previously thought, and Q2 earnings will likely substantiate that.

So, how far down will we go? The longer picture does not easily provide a downside target for these purples (which show up as red minis on the one-year charts). If one applies a Fibonacci scale to the up move from March, a 38.2% retracement (minimum fib ratio) would take the Dow to about 7980. Other fib numbers would project to the low-mid 7000s. I prefer to see how the channel develops, and right now we are at the lower lines, so some sort of bounce within the downchannel is likely first.

7/9 -- The Naz, QQQQ, SPX, XLF, XLE, and XLK all broke upward from their short term red mini channels today. That bodes well for the others to follow upward over the next few days. While it does not appear to be a very strong rally yet, it should zig zag higher as a counter trend move. Whether it makes it to the upper purples or not is an open question. The fact that several indexes pushed their purples lower is already a sign that this decline (the purple channels) has become more serious (i.e steep) than originally indicated.

Ahsan U. Haque of Thesmarttrader also has a head-and-shoulder break in the S&P but also talks about the potential for a bounce to 907-913.

Andrew's Pitchforks make for good viewing:

Joe has his week in review.

I like this Euro-Dollar comparison chart. Based on this it looks like a falling Dollar / rising Euro is favoured:

Close to a bottom in the S&P weekly (see StochRSI and full stochastics)? Although bounces are not necessarily long in duration (see 2008).

Joe likes to watch this but not much news on the hurricane front.

Finally, Matthew Frailey takes his view on EWT to give a downside target of c600 for the S&P

So are we looking at a short term bounce to lead into another hard September/October?

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, stock charts, watchlist, multi-currency portfolio manager and strategy builder website. Forex data available too.