Monday, February 16, 2009

Weekly Stock Charts review from Publishers: Happy Holiday

One bad day and four so-so days left the market down but stuck in a bit of a rut. Is there any direction to be found?

Yong Pan opens with a swathe of neutral signals, both from the S&P and breadth indicators. However Yong comments he doesn't see much room for upside.

The charts were similarly lackluster. It looks like the 50-day MA is the area to watch for the SPY:

Support buyers can look to the consolidation triangle; is there an opportunity here? Trade break (support or 50-day MA) with stop on the flip side; technicals mixed:

Distribution days are thinning as accumulation days maintain steady form:

Maurice has recovered and opens with three positive technicals:

Dragonfly Doji for the Dow

A Dragonfly Doji candlestick formed on the DJIA daily chart yesterday, which is a reversal one-day candle pattern. A Dragonfly Doji occurs when the open and the close are at the high end of the day. This Doji could signify a turning point for the DJIA. Notice that a progressive rising channel has been completed with the appearance of the Dragonfly Doji. Also notice how the rising minor trendline runs parallel with the upper level of rising resistance, which forms the upper boundary or a trend channel. The reversal pattern was not confirmed on Friday. A follow-through occurs when prices close above the highest peak on the Doji.

A Hammer for the S&P 500

The S&P 500 got a Hammer candlestick yesterday near key support. The pattern has a long tail underneath it. This is a bullish signal, particularly because the hammer occurred around price support levels. Friday's candlestick didn't produce a follow-through either. It was a spinning top, another pattern of indecision, showing just how confused traders are.

Bullish Engulfing for the QQQQ

The QQQQ has taken a leadership role in this recent rise off the November lows. It is still in an up trend. On Thursday the Qs got bullish Engulfing candle pattern. This two day pattern has a red candle, which is followed by a white candle which fully engulfs the first day. The first day of the pattern reflects the trend, which is down. Engulfing patterns often appear at the end of a down trend. Friday's candle on the Qs was a Doji, so the pattern didn't get a follow-through yet, but it may early next week.

Patterns still need confirmation but Maurice suggests this could take a couple of days. Maurice has/d big expectations. Tuesday will be interesting

Please study the first three charts of the DJIA, the S&P 500, and QQQQ. The class A divergences on the hourly chart sometimes take a day or two to play out. But the divergence is still credible at this time. I thought we would get a huge pop today based on the double dose of bullish divergences on the 15 and 60 minute charts in conjunction with Thurday's reversal candle patterns. But traders were gun shy because the Senate won't vote on the stimulus bill until Friday evening. It already passed in the House. Votes were amoung party lines.

By Tuesday, when the market opens we will know if this government socialized spending bill, disguised as a stimulus bill has passed or not. But with the three Republican defectors in the Senate it looks like President Obama will have it passed and signed by President's Day.

Personally, I find any weakness of one-day reversal candlesticks bodes badly and invariably sees tests, then breaks of the reversal candlestick lows. But if the markets can move strong Tuesday it would confirm the bullish reversals (reversal candlestick highs are the confirmation price). Maurice's 15-min Dow points to the Three White Solder breakout

With a channel bullish wedge also on the menu:

Richard Lehman is looking for the January effect to extend for small caps, but still sees large caps testing November lows:

2/14 -- In the short term, the majors are now bouncing upward off lower channel lines, but the large caps are bouncing within downchannels while the small caps are bouncing within upchannels. That underscores the longer picture which shows the small caps up 18-25% off their November lows -- more than double the equivalent percentage move by the Dow and SPX. As such, large caps have been rolling over for a retest of Nov lows while small caps are not threatening a retest at all. This may well be due to the famous 'January effect' which does extend into February according to Yale Hirsch and the Almanac.

Sectors are weak, but gold keeps trucking. No surprise, its really the only place to hide these days. I still like DXO down here even though in a short term downchannel. Interestingly enough, VIX is in a downtrend, though the big discounts in the March and April futures have dissipated.

2/11 -- Most indexes held in their current short term channels, most of which are green uptrends. Several magic touches occurred right on green support lines. The XLE broke a bit, but may now be ready to reverse. The momentum since mid January is still positive despite the stimulus selloff. One thing to note is the QQQQ daily one-year chart, where an uptrend shows much better than the purple downtrend on the other one-year charts.

2/11 -- Since people are asking...Here is a page where you can get the VIX futures prices.
G9 is the Feb contract; H9 is the March contract; J9 is the April contract

2/10 -- Probably the biggest case of buy-on-anticipation and sell-on-news I've seen in a long time. What a calamity! Chartwise, the indexes had hit their upper greens yesterday and were close to decloining purples. That provided serious resistance to further upside. The reversal off that channel resistance came all the way back down to the lower green channel lines, and a couple of them (like SPX) exhibited some channel magic by bouncing right off the green near the close.

Contrast Richard's chart to Maurice's

Finally, David Bailey gives his view on the week:

Market day 2/13/09, Bottom Line: No follow through. I don't know if this is because of the three day weekend, or the bounce is over, but there was virtually no interest in buying stocks today. I got out of dodge on the long side after I saw it could not get back over 839. I was just trying to get cute on a little more upside before it falls apart again anyway. Yesterday, I may have sounded bullish, but I was merely talking about another one of these rallys we have seen that go up for a few days. Short covering, a little buying, some squeezing and the next thing we know we are going up for a few days to a week. It was looking decent today (except volume) when the middle of the intraday W was tested successfully and then nothing happened. We'll have to wait until next week to see if they want to rally or that was the end of it. The way things left off, it does not look very promising. If there is further upside, it looks like it may be in the area of 850-860. One thing is pretty certain: we have not seen a bottom. Well, not one like all the rest of them since Oct '07. CPC still very low also. Wave E over already? LOL.

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