Sunday, March 04, 2007

Weekly Review

A busy week for market watchers - what had the Stockcharters got to say about it?

Joe Reed leads off with a big picture look at the Dow. He points to the struggles of the Dow in creating a top in 2000 - will the next few months see some of this whipsaw return?

If a whipsaw period was to develop then there is a potential long play for the SPX (holding November reaction lows is key):

Mitchell Meana had some interesting targets for the markets. First up is the Nasdaq 100 - note his reversal count is 15 days into his 18 day count, so a bounce to close the breakdown gap could occur some time next week:

He has highlighted the potential bounce zones in the Qs:

His target for the DIA looks bleak:

His Russell 2000 iShare call was a smart one:

His NYSE call fell just 10 points short:

I find Ted's new(ish) chart formats confusing (the solid grey charts). His lead chart for the Qs shows all of the overhead resistance levels and on the right are his list of support levels. $42.18 is next on the support side:

Matthew Frailey shows an interesting chart for the relative performance in the semi's:

Next, take a look a this next chart: I have plotted the SOX, along with the SOX relative to the other major indexes. As you can see, the SOX is now outperforming relative to all the major indexes. Therefore again my thoughts are that the SOX holds up better than the rest of the market during this correction and then breaks out and sends the market to new highs later this year. We'll see though, however in the short-term this correction is not finished and it's all emotion now.

Robert New shows the channel breakdown in the Nasdaq, supported by the bearish divergence in the RSI:

The Wilshire 5000 came close to testing 2000 highs:

The NYSE looks set to test support of from 2005/2006 reaction lows, which would put the test at around 8200+:

The Russell 2000 operates on a similar support trendline; look for test of 720:

Again, Richard Lehman has some great charts. His comments are as follows:

3/3 -- Thanks for everyone's e-mails and support. Its clear that by virtue of hits, lots of people are viewing these charts, even if others get more votes. (That just means you all you loyal followers need to vote more often!)

I began drawing in the larger downchannels today. Bear in mind that they are still tentative, though I think they capture the overall angle and direction of this move. The best view of this decline seems to be in the hourlies. Judging by the last declines of this magnitude, and where the lower channel supports lie, we still probably have quite a ways to go on the downside. At some point, yes, a decent mid-course bounce will likely occur - something in the order of 200-300 Dow points, but it could be days before that even begins.

Some of the sector charts are not in very bad shape. The XTC is actually still in its uptrend, and the XLE shows a possible larger channel that it could be close to the bottom of.

The longer term charts provide an excellent perspective on this move and should be heeded. They show prior declines like this lasting a month or two with one good bounce in the middle and then another bounce at the bottom before a true bottom is had. There is no reason to believe (or hope) that we are going to just turn here and head back up to new highs.

Best bet for bulls will be to bail on the next bounce (retest of breakdown gaps) and wait until either [1] new 52-week highs are made or [2] some of the suggested downside targets are reacehed. Shorts will get aggressive if the markets make it back to 52-week highs, some will jump in on Fibonacci retracement levels. Plenty of supply to the upside.