Monday, November 09, 2009

Weekly Review of Publishers' Charts

With the launch of the new Zignals website with its Trading System builder and all-in-one Dashboard I have had my hands full. But this week I can return my attention to the market. Today is producing what could be another big day for the market; but is it sustainable?

Anthony Caldaro
of has marked in what looks to be a new 5-wave structure down as part of an 'ABC' correction ('B' in place from October's high); the current move is wave 2 which should peak below October's high.

Yong Pan of Cobrasmarketview holds to a more bullish short term picture and bearish intermediate picture. With the VIX getting hammered it doesn't look like bulls will be giving up anytime soon (the VIX can and has been much lower).

But Yong Pan has called 2 major distribution days inside of 5 as the start of the next down-leg (on an intermediate time frame - so the short term bullishness shouldn't have much juice left in the tank).

But today has seen the SPY crack through converged resistance

With a head-and-shoulder target for the S&P of 1,246

Richard Lehman has launched a new site: His weekend comments are below and he is no doubt pleased with today's start given what he said:

11/7 -- The immediate picture is clearly up for most indexes as you can see from blue mini channels on the short term charts. Most, however, are at the upper lines of those minis and therefore subject to some weakness early in the coming week. I drew in a possible larger downchannel on the Dow hourly chart, which appears to be influencing the index somewhat, but to be honest, I expect the blue mini channel to break through that line to the upside this week.

The more important issue is in the longer term charts now. Action in the last several weeks shows waning momentum in the uptrends from March along with a de-coupling among the indexes. Gold, for example has accelerated upward, while oil has flattened considerably. Higher beta sectors such as financials, technology and China stocks have flattened. The communications index may even be rolling down. The small caps have corrected more than large caps.

This shouldn't come as a surprise. The uptrend in the markets from the March bottom cannot sustain itself at the same pace going forward. If it does, we would recover to mid-2008 levels by the first quarter of 2010, and that hardly seems warranted, given the damage to the economy, the lessening effects of stimulus, and the general distaste for paying a big premium now to own stocks.

The one-year charts show that the upper green channel line from March has been touched 5-6 times now by the broad indexes, but the lower line, was only touched once at the July bottom until now. The small cap indexes have all just touched that lower green a second time. For the SPX, that line would be at 1000 or less right now and for the Dow, around 9500. Bear in mind that this lower green channel line doesn't even come from the actual March low -- correcting down to a line off the actual low would take the Dow, for example, back to 8500, at the current time.

To me, the picture says we will likely flatten some more with the Dow seeing perhaps one more peak between 10,000 and 10,500 before drifting down toward 9500.

Ted Burge and his looks to me like there is still some room to resistance for large caps:

While the Nasdaq 100 appears to be already there:

Joe Reed shows the break in the Gold and Silver Index - although a broadening wedge could also be drawn on the action (bearish)

Finally, Matthew Frailey has a very interesting chart showing the divergences between GE and the S&P.

Looks like bulls have enough to get this close to a test of October highs. The question is whether bears are willing to step into the fray to contain this uber-stretched advance.

Dr. Declan Fallon, Senior Market Technician, November 2009 has seen a significant upgrade and is on course to becoming the eBay of finance with our new Beta MarketPlace and a new rich internet application for finance, the Zignals Dashboard. Zignals now has new fundamental stock alerts, stock charts for Indian, Australian, Frankfurt and soon Canadian stocks, tabbed stock list watchlists, multi-currency portfolio manager, active fundamental system stock screener and trading system builder. New Forex and Index data.

Archived stock chart review from March 2008