From: Fallondpicks.com
Value players stepped up to the plate in Friday afternoon trading, to push the markets into green territory. The short term picture favors the bulls, but with supply at the previous two reaction highs, it will be much harder for intermediate and long term traders to benefit. Adding insult to injury was the meager volume - the Big Money was not buying into the late day rally.
What of the individual markets? The NASDAQ closed inside the Fibonacci retracement area, but finished the week below its 50-day, and 20-day MAs. Technicals remained weak. The NASDAQ 100 ended Friday with a bullish harami, bouncing off the lower Bollinger band. But, the 20-day MA crossed below the 50-day MA (a mini-'Death cross'), and with the 200-day MA below it looks like we will see a test of the latter average, before we see any meaningful rally develop. The Dow failed in its second attempt to close above 10,940 resistance, which was so troublesome in December, and could be the basis for a reversal head-and-shoulder pattern (although drawing a neckline is difficult, as there is not a clear area of support, but a zone of demand as marked by the 10,660-10,708 range). Technically, the Dow turned bullish in MACD, on-balance-volume, and slow stochastics - so maybe 10,940 won't be so problematic as it would appear to be. Either way, if looking to buy, one is best to wait for a clear close above 10,940. The Russell 2000 finished Friday on a doji, a few points above rising trendline support, but below the 20-day MA. Unlike the Dow, the technicals of this index remain weak. It does, however, remain the leading bullish market. The semiconductor index has a mixed outlook; the double top marked by the shooting star/gravestone doji combination, will likely outweigh whatever support the 20-day MA has been providing up to now. Hold, until there is a break of the 20-day MA on a closing basis. Finally, the S&P was able to finish the week inside the Fibonacci zone, but as with the NASDAQ below its 20-day, and 50-day MA. Technicals are mixed; a bearish MACD, and slow stochastic, is countered by a bullish on-balance-volume. Volatility has yet to spike upwards, but the rising 50-day MA could provide the injection of fear this indicator suggests will come.
There was little to add about the tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ], all closing down on the week, with MACD weakness confirming the earlier bearish crossovers in the 5-day EMA.
Precious metal stocks, and base metal prices, endured a volatile week. For gold and silver, a move to the 50-day MA looks to be the logical play in each of these markets. But this needs to be viewed within the context of a fast approaching 4-year cycle top. The next few years should provide a good opportunity to accumulate commodity miners and producers as the hype of recent gains fades from memory. Short term traders will likely find the sector a little tough going from here.
Newsletter update: ALVR has reversed sharply from Tuesday's bull trap. The stock featured for January 19th and closed for an 8% loss. DGIN hit its stop after seven days of weakness. The stock had undercut its 50-day MA on Thursday. The October 27th feature closed for a 17% gain, and the January 6th play for an 8% loss. EMAG hit its stop after a two-day period of volatility, switching from gains to losses. The stock closed inside the consolidation area, but the intraday swing was enough to knock out the raised stop. The stock was a Subscriber feature for December 7th, and as a Breakout play for January 5th. The Subscriber feature closed for a 22% gain, and the Breakout play for a 7% gain. SELA was a Subscriber feature for December 5th and January 5th, and a Breakout feature for February 8th. The stock created a bull trap and further weakness looks likely. The two Subscriber plays closed for a 38% and 7% gain respectively, and the Breakout play for a 5% loss. DSPG was a Subscriber pick for January 26th and closed for a 6% loss, although it did finish Friday above the 50-day MA.
What of the individual markets? The NASDAQ closed inside the Fibonacci retracement area, but finished the week below its 50-day, and 20-day MAs. Technicals remained weak. The NASDAQ 100 ended Friday with a bullish harami, bouncing off the lower Bollinger band. But, the 20-day MA crossed below the 50-day MA (a mini-'Death cross'), and with the 200-day MA below it looks like we will see a test of the latter average, before we see any meaningful rally develop. The Dow failed in its second attempt to close above 10,940 resistance, which was so troublesome in December, and could be the basis for a reversal head-and-shoulder pattern (although drawing a neckline is difficult, as there is not a clear area of support, but a zone of demand as marked by the 10,660-10,708 range). Technically, the Dow turned bullish in MACD, on-balance-volume, and slow stochastics - so maybe 10,940 won't be so problematic as it would appear to be. Either way, if looking to buy, one is best to wait for a clear close above 10,940. The Russell 2000 finished Friday on a doji, a few points above rising trendline support, but below the 20-day MA. Unlike the Dow, the technicals of this index remain weak. It does, however, remain the leading bullish market. The semiconductor index has a mixed outlook; the double top marked by the shooting star/gravestone doji combination, will likely outweigh whatever support the 20-day MA has been providing up to now. Hold, until there is a break of the 20-day MA on a closing basis. Finally, the S&P was able to finish the week inside the Fibonacci zone, but as with the NASDAQ below its 20-day, and 50-day MA. Technicals are mixed; a bearish MACD, and slow stochastic, is countered by a bullish on-balance-volume. Volatility has yet to spike upwards, but the rising 50-day MA could provide the injection of fear this indicator suggests will come.
There was little to add about the tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ], all closing down on the week, with MACD weakness confirming the earlier bearish crossovers in the 5-day EMA.
Precious metal stocks, and base metal prices, endured a volatile week. For gold and silver, a move to the 50-day MA looks to be the logical play in each of these markets. But this needs to be viewed within the context of a fast approaching 4-year cycle top. The next few years should provide a good opportunity to accumulate commodity miners and producers as the hype of recent gains fades from memory. Short term traders will likely find the sector a little tough going from here.
Newsletter update: ALVR has reversed sharply from Tuesday's bull trap. The stock featured for January 19th and closed for an 8% loss. DGIN hit its stop after seven days of weakness. The stock had undercut its 50-day MA on Thursday. The October 27th feature closed for a 17% gain, and the January 6th play for an 8% loss. EMAG hit its stop after a two-day period of volatility, switching from gains to losses. The stock closed inside the consolidation area, but the intraday swing was enough to knock out the raised stop. The stock was a Subscriber feature for December 7th, and as a Breakout play for January 5th. The Subscriber feature closed for a 22% gain, and the Breakout play for a 7% gain. SELA was a Subscriber feature for December 5th and January 5th, and a Breakout feature for February 8th. The stock created a bull trap and further weakness looks likely. The two Subscriber plays closed for a 38% and 7% gain respectively, and the Breakout play for a 5% loss. DSPG was a Subscriber pick for January 26th and closed for a 6% loss, although it did finish Friday above the 50-day MA.
