There was an interesting relationship between profitable long trades in the S&P and the Zig-Zag indicator applied to the VIX. Over the past 10 years there have been 4 periods when a trade initiated at turns in the Zig-Zag indicator have turned profitable long trades - with no failures. The 'buy' side Zig-Zag signal has matched reaction lows in the S&P very nicely. The 'sell' side Zig-Zag signal has been a little early, although during the 2000-2003 Bear market it gave a perfect signal. However, one thing which has been consistent across 'sell' signals has been a lower 50-day MA compared to the 200-day MA. In the current market, this would approximate to another 6-months of VIX weakness/sideways action (and higher market prices). In terms of S&P returns it could be anything from 15-50% depending on market conditions (likely the lower end of this range for a bear market). Does this rank as another tick in the bull column?

I ran a quick scan for dividend paying stocks on MSN Screener with the following parameters: Current Dividend Yield >= 5% Market Capitalization >= 100,000,000 Div Yield: 5-year average >= 5% EPS growth YTD vs YTD >= 25% EPS growth Qtr vs Qtr >= 15% Return on Equity >= 17% The screener returned eleven stocks; best of the bunch were [1] Terra Nitrogen Co. LP ( TNH ): This has the added advantage of belonging to Agricultural Chemicals, ranked strongest sector according to Barchart.com . The weekly chart is looking tired with falling volume on new highs combined with a bearish divergence in the MACD trigger line. Should the stock trade inside a $72-$126 range it would be an attractive dollar-cost-average candidate. Those looking to pick a single entry price should look to the Fibonacci levels: $103.71, $106.66, $114.92 and/or the 50-day MA. Re-invest the somewhat erratic dividend and this could be a great long term hold as commodities (and their associated stocks) t

The last two days have seen tweezer bottoms in large cap indices, a bullish piercing pattern in the Nasdaq 100 , and a (somewhat) bullish engulfing pattern in the Nasdaq . But my favorite, the semicondutor index , refused to buckle in the face of broad market selling over the last week - although it would be hard pushed to shed more than it has already. Wednesday's bullish hammer is the icing on the cake. Watch for a fresh MACD trigger 'buy' (but well below the bullish zero line, a weak signal) as other technicals improve: The Semiconductor index has a Point-n-Figure chart target of 260 (which would amount to a 50%+ decline from its 2007 highs!). To negate this target the index would need to muster an upside breakout, with 364 likely to define such a threshold. The technology sector is one of the first to push higher from a recessionary environment. Chips should lead other technology based sectors. For the purpose of disclosure I am long some deep-in-the-money calls on the

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