For the first time in this blogs history, every third or so visit has come from a search for "Market Bottom" or variation thereof. Ranking first on the search is great too - ahead of Big Picture , Forbes (old 2001 story) and CNBC's Jim Cramer - that won't happen too often Trade my Stock Picks at

In my newsletter you will see an overall 'Market Health' rating for the current month which is either Bullish/Buy or Bearish/Sell. I base this rating on the state of the market internals (Bullish percents, % stocks above key moving averages, and the Summation Index) and the relative position of the markets with respect to support and resistance on yearly charts. The chart below shows my respective calls since January 2006 for each of the months that followed: It has been a mixed bag with a nice call on 2006 lows, but a missed opportunity on the early 2007 rally. I have remained bullish for December and January as I believe the market is offering discount opportunities for the next rally, particulary in Blue Chip stocks (with Energy perhaps the only sector somewhat overvalued). Looking back at the Nasdaq over the last 10 years there are some interesting observations to be made: The longest losing strength for the Nasdaq was a 6 month period in 2002, which led to the absolute lo

With markets either in, or about to start, cyclical bear phases I took a look at the extent of the damage which could follow. I started with the semiconductor index (well, the Semiconductor HOLDRs, SMH ) as this was the index most hit by the selling in recent months. I looked at the relative percentage difference between the 50-day and 200-day MAs as this removes some of the short term volatility which can skew daily extremes. The SMH only has 6-years of data, but there is evidence to suggest worse could follow. However, like an elastic band, ever swing to one extreme tends to be followed by a counter move of similar weight in the other direction. During the bear market bottom and bounce, the relative difference between the two moving averages reached extremes of +36% and -27% . The current difference is a paltry +11% (but a bounce could see a 50-day MA rise 8% or more above the 200-day MA). With the S&P it is possible to look back over the last 50 years. Even here it is appar

Markets continue to toy with a bottom, but the bullish percents haven't suggested one is complete - yet. The Bullish percents for the Dow and S&P sit at logical support. But the Nasdaq Bullish percents have entered cylical bear levels, so look for shorter rallies from this index.

Will election year bring a healthy boost to the market? 2000 was hardly a glory year for the markets, and 2004 was another disappointment - third time lucky?

Moving averages are the simplest trend measuring tool to be found. The following two charts show clearly how market health has changed from a cyclical bull market into a more bearish, counter rally structure. Plotting the percentage of stocks which trade above their 50-day and 200-day MAs, for both the Nasdaq and S&P, gives a good indication to the overall health of the market. When the market is in healthy bull form the percentage of stocks trading above their 200-day MA should be greater than the percentage trading above their 50-day MA. Why? In bullish markets, the faster moving average trades above the slower moving average. In this situation, it is not uncommon for a stock to trade below the 50-day MA, as it might do during a bullish consolidation, without violating the slower, longer term average (200-day MA). In a bearish market environment, the slower moving average trades above the faster moving average. During counter bear rallies it is common for the faster moving averag

The Fed made it's hardly unexpected 25 basis point rate cut, and the market reacted like it was a big surprise. Too much hope and not enough reason priced into the market, contributed to the large decline. The 50-day MAs were there in the end to be the bull spoiler, and the warning sign for trouble. The reason for the reversal will eventually fade to memory, and we will be left with a chart which said the 50-day MA was resistance. But that would only tell half the story. Yesterday was a great example of how key market events and technical parameters can work together. The presence of 50-day MA (or 200-day MA, even the 20-day MA) was a flag to suggest the market was susceptible to a significant news event - even one as expected as the Fed announcement. The chance for a ho-hum response to the Fed announcement was never going to be high. The Dow could have just as easily added 200 points if the perception for what the rate change meant for the stock market was positive. Had the mar

Volatility and the S&P sit at two important tests; the S&P is nestled against 200-day MA resistance, while volatility holds at 50-day MA support. The relatively high volatility suggests a good deal of fear in the market which should be ( contrarian ) bullish for the S&P. However, the S&P sits at a ( potential ) major resistance level and with oversold stochastics for volatility combined with what looks to be a positive test of support at the VIX 50-day MA. It could be a rocky road down to August lows in a "Bah Humbug" kind of way for the Blue Chip average. If this turn of events was to occur it should reveal itself over the next couple of days. I suspect the next major downward turn for the market won't occur until Volatility makes its way back to the 200-day MA. So patient buyers might find some joy taking advantage of what could be a short, sharp, retreat for the S&P before rallying back to its 200-day MA (and possibly higher). , , ,

Bears stamped on the post-holiday feel-good rally taking the indices not only to last Wednesday's lows, but in some cases beyond it (I am looking at the Dow and S&P here). The index to watch for today is the Russell 2000. It finished as close to support as it could without breaking it. Another down day like Monday's and only a 'bear trap' would save it - i.e. Wednesday (tomorrow) would have to be a massive rally. A confirmed double top in the Russell 2000 would likely signal the same for Large caps - and eventually Tech indices too The semiconductors tell their own sad story; in July they were challenging 550, now they are struggling to hold 400 - a 27% fall is bad is anyone's books, but I am surprised this hasn't influenced the Nasdaq, or Nasdaq 100 more. A developing bullish divergence in the supporting CCI gives the best hope for value buyers: Tuesday will be interesting. Fallond

An incredible (further) sell off on Wednesday has been followed with a modest pullback on this shorterned trading day. The biggest story of the week are the internals - something you will have no doubt seen mentioned on other blogs. Here is my take. The Nasdaq Bullish Percent Index is only a couple of points away from entering bear market oversold territory, but is at a bottom for a bull market: The percentage of Nasdaq stocks above the 50-day MAs is also lingering close to bear market territory, and like the bullish percents, is at a level which generated the August bounce. Note the developing bullish divergence in Ultimate Oscillator, a good sign for a bottom here. The Nasdaq Summation Index is perhaps the only internal which still has some downside room to indicate a strong bottom, but an uptick here would not preclude a decent rally: Today's action will be interesting for those few traders who decide to take a dip in the pool, as things look nicely set for a big gap up on Mond

The indices took another big knock with the Russell 2000 the index to watch for today: The Nasdaq has at least the 200-day MA to look too But large caps look to be using the Russell play book - bye bye last week's lows: And we won't mention the semiconductors: Fallond

Bulls made a better stab at it to close the week out. Options expiration clouded the volume issue, so whether it was an actual accumulation day for the indices will probably depend on what happens on Monday. Thanksgiving will suppress trading volumes - so the issue of whether there is support will probably resolve itself the following week. Tech averages were able to find some ground at the 200-day MA, although large caps finished the week below this important moving average. On better news, small caps are finding some footing in what looked like a void of support around 760-770. It's technicals are oversold and in a good position to build some upside. Semiconductors look ready to bounce as the endless selling starts to tire - which will help the Tech averages. Fallond

Bears had a field day as they pushed the Bulls around with relative ease, taking down what modicum of strength buyers tried to muster from the open. Volume again eased in a trend which suggests selling enthusiasm is on the wane, even if the headlines suggest otherwise. Nasdaq internals still haven't hit the levels seen in August (although August lows did reach deep oversold levels) so the inkling here favors more downside. If the Summation index: and percentage of stocks above the 50-day MA can rise above their 5-day EMAs with supporting technical 'buys' for the likes of the MACD (in particular), then there is the potential for a strong bullish divergence which would set up a 'Santa' rally. Long term bears will look to August lows as the line in the sand for the start of the next cyclical bear market. For the semiconductors it looks like the cyclical bear is off and running: While small caps are perhaps the first of the lead indices to worry about such support: With

The Nasdaq found its legs at the 200-day MA and is at least enjoying a bounce. The Nasdaq 100 wasn't as weak and has risen in sympathy prior to testing its 200-day MA. However, yesterday's selling put a big dent in the rate of decline for the supporting technicals. Bullish percents, stocks above 50-day MA, and summation index all suggest there is likely more downside to come. This will be of little comfort to large and small caps which are lingering below their respective 200-day MAs (small caps are well below their 200-day MA). Fallond

With so much overhead supply it is hard to see where indices can go here. The Nasdaq is perhaps looking at a move back to the 50-day MA (along with the Nasdaq 100). The Dow and S&P will perhaps loiter around their 200-day MAs, while semiconductors and small caps swirl around in confused trading - perhaps finding resistance at their 20-day MAs. Fallond

Bulls and bears are in a bit of a tussle, but given this fight is occurring in the low end of yesterday's range the advantage would lie with the bears. The weekly close will be of a significant importance for the averages. For the Nasdaq there is still a good deal of support to look too: But bears will point to the extended weakness in the semiconductors. There is very little in the way of support until July lows are tested - ugly.... Large caps are in the process of making an important test of 40-week MA support. A decisive volume break of this average would set up a test of the August lows and a potential double top confirmation. But, this is still some time away: Small caps are in bigger trouble having cut through their 40-week MA. Only August lows remain to save the Russell 2000. Lower highs and lower lows are on the cards: Fallond

The blog posts will be a little slow for the next few days as I have relocated into a new abode and need to get set up on wireless/broadband. The markets are trading in a scrappy up and down, mixed with rising volatility. Support from mid-October lows still holds true for many indices, but overhead supply is never far from any strong day the market logs. There is some interesting bullish action from some of my newsletter stock picks - which would at least indicate some pockets of strength: Mastercard ( MA ) for one: Occidental Petroleum ( OXY ) is another: Maybe today is a day for buying? Fallond