Tuesday, November 11, 2008

Weekly review of Stock Charts

Swamped yesterday so there was no time for the Stockcharts.com review. Can squeeze it in today given yesterday's action was important for market bottom watchers.

Yong Pan kicks the week off with a relatively bullish set of indicators; no bearish markers but six of his breadth and S&P watch levels are neutral:

Looking at his indicator variables; the likes of the CPC and New Lows for the right-hand-shoulder are very different to the picture painted during the left-hand-shoulder; much more bullish - but, in themselves could be viewed as neutral and capable of going either way (which also means down.....)

Intermediate time frame signals are all bullish:

With a Joe Reed style chart showing a stochastic 'buy'

Fifteen minute chart is interesting for demand buying at support; but the convergence of the moving averages also suggests plenty of resistance. First hour or so of trading will be key:

Maurice Walker is anticipating a bullish cross in the Aroon this week although noted the failure of the bullish harami to follow through.

Another way of looking at support - this time the 15-min chart in the DIA:

Robert New shows the carnage on the 3-year chart:

With support targeting 2002 lows (2009 target???):

Similar targets for the Wilshire:

Robert has a whole list of indices telling the same story on his public list.

Jack Chan has a fresh 'buy' signal for the Oil Services Holders (OIH):

But as yet - not the US Oil Fund (USO):

Gold Bugs also on a 'buy' signal

Ted Burges' ATR point-n-figure chart target for the Nasdaq made me wince:

His monthly Dow chart shows just how much room there is to maneuver between support and resistance:

Joe Reed's dollar chart suggests 92.50 will be resistance given the position of Full Stochasitcs.

Finally, Richard Lehman sees across the board pressure on the short term rallies (contrary to the above):

11/10 -- The green upchannels on the short term charts are weakening. We are seeing successively lower highs over the past week or so and in some cases, we're seeing the beginnings of breaks. I've adjusted a few charts to draw the channels based on lower rather than upper lines and that keeps things in the channels for now, but the pressure is building on those support lines. VIX is back up there, and I noticed the options also get much more expensive on the XLE today.

11/7 -- Main direction in the short term continues to be sideways to up but with very wide channels, since the initial leg of these channels was the huge drop and recovery on 10/10-10/13. We just completed a strong downward mini channel and turned up at the end of the week, but even though strong, that downward mini only brought us half way down the larger short term channels. Thus, it is not clear yet whether another drop to the bottom of the channels lies in front of us or whether the low this week actually forms a new 'higher low'. The short term minis will clue us in thus week as it unfolds.

Longer term charts still look good for further upside over the next couple of months, but note that the sharp upswings are only legs of a larger upward long term channel that is not all that steep (and not expected to be, given how much bad news still exists on the economic front.'

BOOK UPDATE: I'm approaching the half-way point in the book and planning the big push between now and my mid February deadline. One chapter of the book will examine ways to utilize these charts and channels in different investment strategies. If you have had good success with these charts, whether to make money or simply incur less of a loss, I would be interested in hearing about your experience and how you have applied the technique. I'm looking to put both quotable comments and live experience in the book from folks that have been following me. Please e-mail me by the end of November if you have something to share.

If you are looking to send Richard Feedback for his book you can do so here.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts and stock charts website