Friday, October 12, 2007

[] Friday report

Newsletter, Members Click Here. To Subscribe - click Bull icon. Thursday and Friday were a bit of a roller coaster, but in the end there was no change to any of the 2 months+ rising channels for the key averages. Where changes emerged was in the higher volume distribution selling for the likes of the Dow, S&P, NASDAQ and NASDAQ 100, and the break of 6-week support for the semiconductor index. Making matters worse for the semiconductor index was the failure of the index to regain the 200-day MA which was breached by Thursday's close. There is enough demand in the major averages to keep bulls happy, but the foundation for this rise is slowly eroding.

Nasdaq market internals [$NASI, $NAA50R and $BPCOMPQ] slowed their advance with a 5-day EMA sell trigger for the Nasdaq Stocks Above the 50-day MA ($NAA50R). The remaining two internals - $NASI and $BPCOMPQ - kept chugging higher. The Nasdaq Summation Index ($NASI) is very close to entering bear market territory top levels ('0'), but has another 500 points to run before it enters bull market territory tops. Given Nasdaq market internals bottomed in bullish market territory it is likely one will see further gains for the $NASI before it tops.

There is still enough optimism in the market to keep the bullish call for the Ticker Sense Blogger Sentiment Poll (30-day S&P outlook) intact. However, the next couple of weeks could see a change in this sentiment. One reason for this shift is the current lack of fear in the markets as measured by volatility.

On a final note, the Trade Ideas scan returned to its bearish ways with a "Top-8" pick list in a very sluggish 51 minutes and a "20-appearance" list in 4 hours and 43 minutes. Given the market finished higher on the day this suggests Friday's trading was nothing more than a paint job on Thursday's selling.

Will it all change next week?