Sunday, August 26, 2007 Weekly review

What proved to be a relatively quiet week, was there anything to add from the Stockcharters?

Joe Reed's Dow and Full stochastic chart is in overbought territory:

With a Full stochastic buy for the S&P on the weekly chart:

I'm keeping an eye on Robert New's Treasury 10-yield chart. Down at channel support so a big test coming up:

He went long the Russell on the test of support:

Richard Lehman is looking for more from the upside:
8/25 -- The charts are confirming the new short term uptrends across the board now. Those who played the upward minichannels in the meanwhile were well rewarded this week and should have more to go. The upchannels have a lot of potential room on the upside and suggest another possibly big move to balance out the opening rocket launch last Friday.

Long term action is more bullish now as well. So far, the long term breaks suggest a revised slope uptrend rather than a new downtrend -- BUT that's not confirmed yet.

8/23 -- The major stock indices are making it difficult to get a fixed upchannel in place, but they are at least showing a well-defined minichannel that is still rising. In addition, the sectors like XTC, XLE, and XLK are showing signs of breaking into a short term uptrend. So the bias is still upward in the short term.

8/22 -- Despite the short term trend lines moving outward each day, the market continues upward. This type of pattern would typically take a smart move upward as a sort of third leg to the intial rocket shot, so that remains a possibility in the short term. I'd say we need to see how the short term uptrends will play out before making a determination on the longer term moves.

8/21 -- The big swing on Friday - exacerbated by the Fed - does now look like a climactic interim bottom of sorts and has led to a short term uptrend on at least the the Dow, SPX and Naz. The pause after Friday's rocket move is not unusual, but the upchannels do now show steep angles as a result. That says there is a good chance a bounce here will be a strong one, but longer term charts have too much damage to let things go too far on the upside.

Maurice Walker is watching for upside breaks of the 61.8% Fibonacci retracements.
8/25 The indices have displayed bullish hidden divergence on their 60 minute charts, which played out nicely yesterday. The Dow has now risen 861 points since it's one day reversal.

The Dow has risen above it's 13,250 area of resistance, having exceeded its 50 percent Fibonacci retracement. It is now quickly approaching the 61.8 Fibonacci retracement at 13,447 and the 50 day MA at 13,474. We are rising on declining volume, which leaves one suspect the advance. We are in difficult period, in determining the ultimate direction of the market. The bulls need a move above the 13,695 on confirming volume, while staying above the 50 & 20 day MAs.

The SP 500, Nasdaq, & RUT have broken their downward trendlines. If the SP 500 moves above the 61.8 Fibonacci retracement at 1485 or the 50 day MA at 1494, then the downtrend may be in jeopardy.

My favorite piece of art is the statue 'The Thinker' by Auguste Rodin. The Thinker was originally meant to depict Dante in front of the Gates of Hell, pondering his great poem. But later in the final version, the statue sits above the gates, pondering the fate of those damned to hell. As traders, we must be a 'Thinker.' We must ponder the evidence of this market, considering whether this could be the early stages of a bear market or if it has just been a correction. Because as traders we can wind up in a lot worse position, than our present state, if fail to heed the warning signs. I often wonder what 'The Thinker' was contemplating. Maybe the fate of those who disregarded an alternative path. Therefore, we must make wise choices, knowing that the market can turn in an unexpected direction. Philosophical thought can sometimes be very complex and difficult to comprehend, but sometimes the most profound thoughts are as simple as a child's bedtime story. Just as that great philosopher Winnie-the-Pooh once stated, 'think, think, think.' Please THINK about voting.

His Dow chart shows an interesting (bearish) reversal head-and-shoulders which may be in development - watch the 50-day MA for signs of resistance:

Howard Blackstein has a good chart for the T-Bill Discount rate - I like the 18-day EMA method he uses - will the trend repeat?

Have a good weekend...