Friday's across the board gains were undermined by accompanying lighter volume; a common sign of short covering. However, Friday's action was not without its positives, most notably, the reversal of the breakdown in the S&P. Modest gains on modest volume, would be the best description for the days' trading action. The Dow enjoyed a substantial point gain, enough to close the index above the 20-day MA and 11,000, but the broadening wedge remains intact. October trendline support could provide the launching pad for a break of wedge resistance, and even with the lighter volume, the Dow could still offer some value to the bulls - but this is likely going to be the only index to give any comfort over the coming months, and will eventually succumb to the malaise affecting the remaining markets. The NASDAQ 100 held former resistance (now support), but watch for a potential measured move back to 1,570 (support, or no support). The 200-day MA inches ever closer and may provide some support before then. Further support may come from the semiconductor index, which is loitering around the 500-505 level and is short term oversold. The Russell 2000 worked a bounce from the 50-day MA, but remains contained by new resistance at the former October support line. Buyers beware.

After a couple of weeks of mild bullish action, the tech secondary indicators [$NASI, $NAA50 and $BPCOMPQ] took a sizable step in the direction of the bears, confirming the sidelines (i.e. cash) as the safest place to be at the moment. Volatility rose to meet 18 resistance and looks ready to advance further, injecting another level of uncertainty into a weak market. Precious metals may not be the best haven to hide as double tops take shape in gold, and silver, supported by bearish divergences in their respective MACD trigger lines. One could argue for a support buy at $542 in gold - but keep stops on a loss of Friday's lows to be safe if buying. The bearish divergences in the precious metal MACDs, was also apparent in some of the precious metal miners, e.g. BGO, PAAS, and HL. Cash is king.

Newsletter stock update

Target hits: FTEK was a Subscriber pick for February 6th and reached its target for a 27% gain.

Stop hits: JBL featured as a Breakout for March 21st 2005, June 23rd, November 25th, and January 20th, cut below near term support to hit its most recent stop price. The four plays closed for 36% gain, 19% gain, 11% gain, and 5% loss respectively. OATS closed Friday on a weak bullish harami, but the lows of the day were enough to knock the most recent stop to close the February 6th play for a 19% gain, and the February 28th play for a 7% loss. VSH was a Subscriber pick from October 31st, which gapped down on Friday and into its stop price for a 21% gain.

Subscribe to my newsletter through the link on the right-hand margin of this blog.

Popular posts from this blog

Nasdaq primed for breakout

S&P "Bull Trap"?

"Black Candlesticks" are a concern for the S&P and Nasdaq


Show more