Friday, May 30, 2008

Markets Ready to Roll Over?

DJIA - 7.90, -0.06% SP500 + 2.12, +0.15% NASDAQ Comp. + 14.33, +0.57% Russell 2000 + 2.73, +0.37% Oil closed at $127.35 up 75 cents I attended my youngest son’s high school graduation this afternoon. His senior class motto was the following: “Live life as if you were to die tomorrow. Learn as if you were to live forever.” --Mahatma Gandhi Give this idea some thought. See if it fits in your life. Ponder whether there is a principle that applies to the art of trading. I did and I am the better for it. I would like you to be the better also. The market rallied in this holiday shortened week. Only the DJIA failed to close higher for the fourth straight day. Come Monday you must trade the markets not your thoughts or the thoughts I am about to share. This market acts tired and ready to roll over. Does that mean the market is going to roll over? Not necessarily. However you want to ready if it does roll over and here is the technical evidence I am seeing Friday... The DJIA had an inside day, essentially a bearish harami and failed to close above its 50 DMA for the second straight day. The DJIA is trading below the 20, 30 50 and 200 DMA. The 20 DMA is pointing down. It is trading below the January/February resistance high that it traded above for three weeks. It failed to break above the R1 resistance level of the large black candle on May 21. The low on May 9 between the double top acted as resistance to yesterday’s advance and Friday the index made a lower high. This is a potential bear flag chart pattern. A bear flag of course is a short term trend continuation pattern. Also Thursday and Friday’s selling is in the resistance area of the 50 DMA. The S&P also formed an inside day on Friday that could be day 2 of an evening start pattern if the index moves down on Monday. While the S&P is above its 50 DMA and right on top of the 30 DMA, it is below the 20 and 200 DMA. It is a the R1 (May 21 large black candle) and 20 DMA resistance areas. The S&P is also forming a potential evening star pattern. The Nasdaq is technically stronger than the Dow and S&P. Still in an up trend that recently made a higher high and pulled back to an equal low. It is trading above its 20, 30, 50 and 200 DMA. On Friday it closed above the 200 DMA while forming a small spinning top. This could be a potential evening star if the index moves down on Monday. It is in the area of resistance of the last high on May 10 and could form a double top or slightly lower high. A potential bearish divergence exits on both the 2 line MACD and the MACD histogram. Remember this index is currently in an up trend. The Russell 2000 is also in an up trend making a new high close on Friday while at the same time forming an inside day that could potentially be an evening star if the index moves down on Monday. The Russell also closed above its 200 DMA on Friday while forming a lower intra-day high than Thursday. The Russell could also be forming a potential double top with a potential bearish divergence in both the 2 line MACD and the MACD histogram. The question seems to be: Will the DJIA and S&P take this market lower or will the Nasdaq and Russell pull the market higher? The indices moved higher this past week and that is bullish. The price action looked weak by the end of the week, which is potentially short term bearish. Mixed technical information is common at key pivot points…points where the market could move up or move down. That is where the market is right now. Remember, technical analysis is based on probabilities not certainties and there is always a small probability the market can defy all the technical, so you must remain mentally flexible. You must also be prepared to trade to the downside if this market or the individual stocks you trade roll over. There will be a brief post Monday morning but I won’t be posting again until Friday due to a family cruise in celebration of our two high school graduates this past week. I wanted you to understand what I was seeing on the charts so you would be aware of the potential of the market to move up or down from this key pivot point.

If you have access to Market Commentary, read what I wrote there at Friday’s close when it is posted on Saturday.

Today’s Action Moving Up: FSLR, CLF, SCHN, CF, MON, MOS, MTL, AGU, IPI, CNX, PCLN, DRYS, X, AAPL, FWLT, BTU, NUE, POT, MEE, BRCM, SOHU, AMZN, V, GRMN, JASO, USO Moving Down: STRA, DECK Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

Thursday, May 29, 2008

Oil Prices Fall, Moving Averages Act As Resistance Once Again

DJIA + 52.19, +0.41% SP500 + 7.42, +0.53% NASDAQ Comp. + 21.62, +0.87% Russell 2000 + 7.09, +0.96% Oil closed at $126.62 down $4.41 Rising oil prices helped energy and basic materials stocks move higher on Wednesday. Falling oil prices sent energy and basic materials stocks lower on Thursday. The broad market found strength and moved higher as we wrote in our earlier post. An afternoon pullback had indices closing below their highs of the day. With energy and basic material stocks down on Thursday the broader market rallied. On the NYSE there were 1,929 advancers to 1,181 decliners. On the Nasdaq advancers led decliners 1,738 to 1,112. The rally found sellers in the afternoon as each of the broad indices ran into areas of resistance. The Russell 2000 had crossed its 200 DMA only to pullback and close just below acting as an area of resistance very much like it did back on May 19. The Nasdaq also crossed its 200 DMA on Thursday only to have sellers push it under by the close. A break above their 200 DMA would be a key pivot for both of these indices. The DJIA which is trading below its 30 and 200 DMA crossed above its 50 DMA only to have seller push price lower with a close just below its 50 DMA. The S&P bouncing off its 50 DMA traded above its 30 DMA only to fall back and close just below the 30 DMA. These moving averages are key areas of resistance. Stay focused to see if the indices can break above these key resistance areas or if they fall once again. Trade accordingly. MA was a big mover after the company said it expected double-digit net revenue growth in 2008 and double-digit profit and revenue growth over the next few years. Today’s Action Moving Up: MA, STRA, V, SOHU, CELG, GS, GRMN, EXPE, RIMM, ESRX, NKE, MS, Moving Down: FSLR, CLF, X, DRYS, USO, CF, CNX, BTU, MEE, PCLN, NUE, MOS, JASO, AGU, FWLT, MON, MTL, DECK Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

GDP Growth Revised Upward, Markets Rally, Energy Pulls Back

The S&P has broken through the horizonal resistance from the January/February highs, the 3o and 20 DMA's and is at the R1 resistance of the May 21 large black candle. The Nasdaq Composite has broken through the R2 and R3 resistance levels on its May 21 large black candle and is breaking through its 20 DMA. The Russell 2000 the strongest of the indices is breaking through its 200 DMA is actually making a new high as we write. This breakout of the 747.99 level gives the Russell a price target of 776.61. It is currently at 749.27. Also the potential Head and Shoulders top has disappeared with today's rally. The DJIA is breaking through its 50 DMA and is at the R1 resistance level of the May 21 large black candle. The Dow is still below its 20, 30 and 200 DMA. To the question I posed in yesterday's post of whether the strong rally in energy and basic material stocks was a sector specific rally or would lead the broader market higher, it certainly seems at this moment to be leading the broader market higher. Many energy and basic material stocks are pulling back today after yesterday's strong rally. This rally seems to be gaining strength from the Commerce Department's revised GDP growth of the first quarter of 0.9% that was released this morning, up from the initial estimate of 0.6% growth. For the past several months in our audio commentary we have consistently pointed out how Fed stimulus of lowering interest rates has historically taken 6 to 9 months to begin to have an impact on the economy. While the news on the economy has been very negative, it seems we are just beginning to see the impact of rates that were begun last August to September. Don't be surprised if the news gets better over the next few months.

Wednesday, May 28, 2008

Oil Moves Higher, Key Stocks Soar, Indices Have Modest Rally

DJIA + 45.68, +0.36% SP500 + 5.49, +0.40% NASDAQ Comp. + 5.46, +0.22% Russell 2000 + 4.07, +0.55% Oil closed at $131.03 up $2.18 Indices moved higher for the second day in a row and closed near their highs on Tuesday. Gains were smaller than on Monday. Energy, Basic Materials and Metals and Mining sectors moved much stronger than the broad indices. Both the DJIA and the S&P closed below Friday’s high. The stronger Nasdaq and Russell 2000 indices closed above Friday’s high for the second straight day. The market breadth was not impressive as NYSE advancers led decliners by 1.3 to 1 and on the Nasdaq the advancers/ decliners was a paltry 1.05 to 1. Watch trading tomorrow to see if the broader market follows the energy, materials and mining stocks or if this is a sector specific up trend that is taking place this week. We need to see the broad indices move back above resistance to change our intermediate trend to up. Oil stocks USO, XLE, APA and NOV were higher with bullish engulfing candle patterns as were many others stock in the energy sector. Coal stocks KOL, MEE, CNX and BTU moved higher with bullish engulfing candle patterns also. Basic materials and Ag related stocks POT, MOS, MON, CF, AGU, PX, X, AKS, and NUE had huge up days reversing much of the recent weakness. Metals and mining stocks CLF and ANR had a mega up day. As mentioned yesterday we are changing our short-term trend reading to up. Today’s Action Moving Up: CF, CLF, BIDU, DRYS, MOS, MA, FSLR, POT, X, MON, SOHU, DECK, AGU, MTL, CNX, MEE, V, PCLN, BTU, RIMM, NUE, IBM, FWLT, USO, NKE, EXPE, IPI, GS, SCHN, AAPL Moving Down: GRMN, EBAY, CELG Intermediate Term Market Trend: Neutral Short Term Market Trend: Up

Tuesday, May 27, 2008

Stocks to Watch on Wednesday

Stocks to Watch on Wednesday AAPL, RIMM, SOHU, SOL, DECK Channeling Stocks Near Support: BRCM, KLAC Up Trending Stocks Near Support: CNX, FWLT, INFY, INTC, LLTC, XLNX, TXN Breaking Below 30 DMA: AGU, MON, POT, DRYS Breaking Below 50 DMA: CF, MOS

Strong Bounce in Nasdaq, Russell and Keys Stocks to Watch on Tuesday

DJIA + 68.72, +0.55% SP500 + 9.42, +0.68% NASDAQ Comp. + 36.57, +1.50% Russell 2000 + 10.29, +1.42% Oil closed at $128.85 down $3.34 As I mentioned in Monday’s post after a big down week last week it would be typical to see a short term rally. Well we saw it today. On the heels of some surprise housing data, the Commerce Department reported that new home sales rose 3.3% in April. This was the first rise in six months and it was widely expected to see another drop in sales. Alan Greenspan was quoted in The Financial Times he thought there was “a greater than 50% probability of recession, that probability had receded a little and the probability of a severe recession has come down markedly.” The DJIA rally was very modest and closed at the R1 level of Friday’s candle still below its 50, 30 and 200 DMA’s and below its January and February resistance level. Today’s bounce came at the S1 level of the April 1 large white candle. Remember the DJIA broke a double top support and has a 12,294 price target as posted last week. The S&P bounce came at its 50 DMA and closed just above the R1 level of Friday’s candle. The S&P made a lower low on Friday and is still below its 30 and 200 DMA and its January and February horizontal resistance level. Watch closely to see if this rally makes a lower high. The Nasdaq Composite hit its 30 DMA on Friday closed just above it and bounced higher today. Today was a large white candle that closed above both Friday and Thursday’s highs and closed above the R1 level of last Wednesday’s large black candle. It is above its 30 and 50 DMA’s and below its 200 DMA. It is also above the horizontal resistance from January and February which is acting as new support. The Nasdaq made a 100% retracement to its May 9 low and if it rallies to a lower high could potentially form a head and shoulders top, although this is not the only potential outcome. Dave’s Insight: Think several moves in advance like a master chess player. The Russell 2000 closed above Friday’s high with a large while engulfing type candle. It closed above its 30 DMA on Friday and bounced higher today. It is above its 30 and 50 DMA and below its 200 DMA. Today it closed above its horizontal January resistance. So today is another breakout. Friday’s low was above its May 9 low so this is a higher low and still represents an up trend. Due to the divergence between the DJIA, S&P and the Nasdaq and Russell, we maintain our intermediate term neutral trend reading. If markets rally on Wednesday we will shift our short-term reading to up. Today’s Action Stocks to Watch for Tuesday Channeling: FSLR, JASO moved lower BRCM, CAT traded near support DECK bounced Up Trending: AAPL, RIMM, SOHU, SOL bounced CNX, FWLT traded near support Down Trending: GRMN, GS, LEH, MER, MS traded near support Moving Up: STRA, BIDU, MA, AAPL, RIMM, DECK, CLF, IBM, V, MTL, AMZN, ESRX, GS, NKE, LEH, SOHU Moving Down: FSLR, POT, MOS, CF, X, DRYS, USO, AGU, MON, IPI, BTU, JASO, CNX, SCHN Intermediate Term Market Trend: Neutral Short Term Market Trend: Down

Monday, May 26, 2008

Stocks to Watch on Tuesday

Stocks to Watch on Tuedsay: Channeling Stocks Near Support: FSLR, JASO, BRCM, CAT, DECK Up Trending Stocks Near Support: AAPL, CNX, FWLT, RIMM, SOHU, SOL Down Trending Stocks Near Support: GRMN, GS, LEH, MER, MS

Oil Rises, Markets Fall...Again

DJIA - 145.99, -1.16% SP500 - 18.42, -1.32% NASDAQ Comp. - 19.91, -0.81% Russell 2000 - 8.91, -1.22% Oil closed at $132.19 up $1.38. On Friday, the indices opened lower and moved down until mid-day. The Nasdaq and Russell 2000 rallied from their lows into the close while the DJIA and S&P traded sideways in a narrow trading range. I mentioned in my Thursday evening audio commentary that the rallies were weak and to watch closely the R1 and R2 levels on Wednesday’s large black candle. When the indices failed to bounce and broke below Thursday’s low this indicated that markets were likely to move lower. I had also pointed this out in my Wednesday post. In both my Tuesday and Wednesday post I wrote of the DJIA breaking the support low between the double top and that broken support would give a price target of 12, 294. The DJIA moved toward that target on Friday and closed at 12,479.63. The S&P broke below its May 9 support low. While both the Nasdaq and Russell 2000 are still above their May 9 support lows. The DJIA is below its 200 DMA and 30 DMA. On Friday it fell below its 50 DMA. The S&P is below its 200 DMA and 30 DMA and closed on Fricay just above its 50 DMA. The Nasdaq and the Russell 2000 are below the 200 DMA, above the 50 DMA and closed just above the 30 DMA on Friday. Only the Nasdaq index is still above its January resistance levels. With the other three indices falling below the January resistance levels and back in the January to April trading channel, we are adjusting our intermediate term trend to neutral. The Nasdaq intermediate term trend is still up. With the pullback of the last week it would be typical to see a short-term rally. If a rally does occur, watch if the rally forms a lower high. A lower high combined with this week’s lower low would confirm a change in trend. Also watch the R1, R2 and R3 levels of Friday’s candle.

Markets were closed Monday for Memorial Day and open Tuesday morning.

Friday’s Action Moving Up: FSLR, AAPL, GRMN, USO, PCLN, RIMM, JASO, CELG, BRCM Moving Down: BIDU, CF, GS, SCHN, POT, STRA, MA, MOS, BUT, LEH, NUE, DRYS, MTL, MEE, DECK, MER, MS, SOHU, CNX, AGU, V, AMZN, ESRX, EXPE Intermediate Term Market Trend: Neutral Short Term Market Trend: Down

Thursday, May 22, 2008

Oil Prices Fall, Stock Prices Rise

DJIA + 24.43, +0.19% SP500 + 3.64, +0.26% NASDAQ Comp. + 16.31, +0.67% Russell 2000 + 5.09, +0.81% Oil prices fell $2.36 to close at $130.81. Stocks prices rallied today and the broad indices remained below the R1 level of yesterday’s large black candle. The DJIA also remained below its 30 and 200 DMA. The S&P stayed at its 30 DMA and below its 200 DMA. The Nasdaq Composite and Russell 2000 both stayed below their 200 DMA and above their 30 MDMA. Numerous bullish haramis, piercing lines and bull flag patterns existed on both the indices and individual stocks charts today, suggesting the probability that prices will bounce higher. It is important to watch for a break through the R1 & R2 levels.

Markets will be closed on Monday, May 25 in observance of Memorial Day. Expect trading volume to be lower than normal on Friday in front of the 3-day weekend.

Today’s Action Moving Up: POT, CF, STRA, MOS, DECK, SCHN, MON, CELG, IBM, CLF, AMZN Moving Down: BIDU, DRYS, FSLR, X, MTL, V, MA, USO, RIMM, NUE, GS, AAPL, LEH, JASO, FWLT and BTU Intermediate Term Market Trend: Up Short Term Market Trend: Down

Wednesday, May 21, 2008

Oil Hits New High, Dow Breaks Double Top Support Low

DJIA - 227.49, -1.77% SP500 - 22.69, -1.61% NASDAQ Comp. - 43.99, -1.77% Russell 2000 - 8.53, -1.16% Oil closed at a new high of $133.17. The DJ Transportation Average closed down 2.06%. Stock prices fell even further on Wednesday. The DJIA broke the support between it double tops which now generates a lower price target of 12,294. The DJIA also closed just below its 50 DMA. The S&P, Nasdaq Composite, Russell 2000 and DJ Transportation are still above their recent support lows. The S&P closed at its 30 DMA. The Nasdaq and the Russell 2000 closed above their 30 DMA. The DJ Transportation closed just below its 20 DMA.

If the indices rally on Thursday watch the R1, R2 and R3 short term resistance levels on Wednesday's large black candle. If a rally fails to break these resistance levels look for a resumption of the down trend this week.

Remember the Memorial Day weekend is coming and that the markets will be closed on Monday.

Decliners led advancer 2,210 to 917 on the NYSE while the Nasdaq decliners led advancers 903 to 1,991. While we changed our short-term trend reading to down on Tuesday, we are still maintaining our intermediate term trend reading as up on all indices except the DJIA, We stress the importance of watching the recent support lows on the other indices for potential trend reversal. Also watch for the same potential break of support on individual stocks. In our watch list most stocks declined. Today’s Action Moving Up: USO, DRYS, MA Moving Down: FSLR, BIDU, POT, X, AAPL, MOS, CF, DECK, RIMM, MON, CLF, AGU, GS, NUE, PCLN, STRA, UAUA, SOHU, LEH, AMZN, CNX, CELG, NKE, MS, V, IPI, SCHN, BTU, IBM, FWLT, GRMN, MER, MTL Intermediate Term Market Trend: Up Short Term Market Trend: Down

Tuesday, May 20, 2008

Oil Hits Another Record High, Indices Fall From 200 DMA

DJIA - 199.68, -1.53% SP500 - 13.23, -0.93% NASDAQ Comp. - 23.83, -0.95% Russell 2000 - 2.60, -0.35% Oil closed at a new high of $129.07. The DJ Transportation Average closed down 0.79%. The bearish candle patterns on the chart yesterday followed through with a significant pull back in the DJIA, S&P and Nasdaq Composite on Tuesday. A late rally in the Russell actually resulted in a smaller down move on Tuesday than Monday’s 0.37% drop. All four broad indices closed well below their 200 DMA. The move down was broad with 392 stocks in the S&P 500 and 74 stocks in the Nasdaq 100 moving lower. On the NYSE decliners 2,031 lead advancers 1,114 and on the Nasdaq decliners led advancers 1,749 to 1,139. The previous low point in the indices was on May 9. That is the support low and a break below could represent a change in the intermediate term trend. A break below the 12,700 level (May 9) on the DJIA would be a double top confirmation with a price target below 12,300 on the Dow. While a conclusion of a trend change is still premature we want to be aware of where these key reversal levels are on the chart. Agriculture related, steels, coal, utility and select technology stocks moved higher. Many technology, transportation and financial stocks moved lower. This may be nothing more than an attractive bull flag support pullback opportunity and we do need to stay focused on key support levels just like we have been watching the potential resistance at the 200 DMA. Today’s Action Moving Up: POT, X, CLF, AGU, FSLR, MOS, CF, MON, PCLN, AAPL, SCHN, CNX MEE, BIDU, RIMM, FWLT, XLE, XLU Moving Down: DRYS, MA, GS, AMZN, BRCM, NUE, DECK, MER, MS, IBM, SOHU, CELG, XLF Intermediate Term Market Trend: Up Short Term Market Trend: Down

Futures Lower, PPI Rises

Futures are lower in pre-market trading following yesterday's late selloff. April PPI rises 0.2% against estimate of 0.4% rise. The Core PPI which excludes food and energy prices rose 0.4% against an estimate of a 0.2% rise

Markets Pullback at 200 DMA, Oil Hits New High

DJIA + 41.36, +0.32% SP500 + 1.28, +0.09% NASDAQ Comp. - 12.76, -0.50% Russell 2000 - 2.72, -0.37% Oil closed at a record $127.05 The 200 DMA proved to be a resistance area where sellers appeared. Monday’s action was up until about 1:30 ET when markets peaked and moved lower. The DJIA and S&P finished higher with the DJIA closing above its 200 DMA and the S&P closing a point below its 200 DMA. The Nasdaq which was the weakest of the indices closed right at its 200 DMA. The Russell closed below 10 points below did not penetrate its 200 DMA although it did get within a ½ point during the trading session. The DJ Transportation index closed up 0.49% also formed a shooting star. Airline stocks are in a downtrend and rail stocks are in a strong up trend pushing this index higher. The DJIA closed looking like a potential double top, with a shooting star candle and a bearish divergence in the MACD. The S&P which made a higher high on Monday, also had a shooting star candle and bearish divergence in the MACD. The Nasdaq also made a higher high and formed a non-idealized shooting star and a bearish divergence in the MACD. The Russell 2000 also made a higher high with a shooting star but did NOT form a bearish divergence in the MACD. Watch closely on Tuesday for lower highs and lower lows in the indices. If this occurs the markets are likely in a short term pullback similar to the peak reached two weeks ago. At this point the technical evidence indicates that this pullback if it appears is a counter trend move. Trade accordingly. Many individual stocks that closed up also showed similar characteristics as the indices with potential double tops/higher highs, a bearish candle pattern and bearish divergences in the MACD. So watch for potential short-term pullbacks in these stocks on Tuesday. AMZN moved higher on an analyst upgrade. MTL is scheduled to split. Monday’s Action Moving Up: BIDU, AMZN, AA, BA, CVX, V, XLE, XLU Moving Down: FSLR, DRYS, POT, MOS, CF, AGU, MON, X, PCLN, DECK, STRA, UAUA, CELG, BRCM, RIMM, CLF, MEE, CNX, BTU, MA, GRMN, SOHU Intermediate Term Market Trend: Up Short Term Market Trend: Up

Monday, May 19, 2008

First Hour - Stocks on the Move

Stocks that are on the move after the first hour of trading: UP: BIDU, MTL, AMZN, DRYS, X, RIMM, CLF, MEE, V, BTU, POT, MA, SCHN, NUE, JASO, BRCM DOWN: FSLR, GRMN, STRA, SOHU The DJIA, S&P, Nasdaq Composite are all positive and trading above their respective 200 DMA. The Russell is barely positive at this moment and still trading below its 200 DMA.

Dow Breaches 200 DMA

Less than 45 minutes into Monday's session, the DJIA breaches its 200 DMA. The S&P continues to trade above its 200 DMA. We'll continue to watch today's trading to see if these indices close above this pivotal resistance level.

S&P Breaches 200 DMA

Minutes into Monday's trading session, the S&P broke through its 200 DMA. This is the first time the S&P has been above its 200 DMA since December. Obviously, a breach of the 200 DMA doesn't mean it will stay above the 200 DMA but this is a key first step. The DJIA is still about 6 points below its 200 DMA at this moment.

Stocks on the Move

Stock Moving Up Early Monday: AMZN, BIDU, DRYS, MTL, MEE, POT, JASO, RIMM, X Stock Moving Down Early Monday: PCLN, GRMN, GS, STRA, MA, DECK, SOHU, CF Dave's Insight: Stay focused on the trend and support and resistance to determine when price fluctuation respresents an entry or exit opportunity.

Stocks to Watch on Monday

Stocks to Watch on Monday: CELG, SCHN, ESRX, MA Index futures are flat from Friday's close just before the open on Monday. Watch the price action around the 200 DMA during Monday's trading session.

Markets Rally From Friday's Lows, End Near 200 DMA

DJIA - 5.86, -0.05% SP500 + 1.78, +0.13% NASDAQ Comp. - 4.88, -0.19% Russell 2000 - 2.21, -0.30% The broad indices recovered from the their intra-day lows on Friday to close near unchanged. The DJIA, Nasdaq Composite and Russell were down slightly, while the S&P closed up slightly for the day. The DJIA, S&P and Russell closed just below their respective 200 DMA and the Nasdaq Composite closed above its 200 DMA. The pause we are seeing here at the 200 DMA is typical as this represents a significant resistance/support area for the longer term trend. Successful breakouts of the 200 DMA will further strengthen the current uptrend that has been in place since the mid-March low. We maintain our current uptrend status. Intermediate Term Market Trend: Up Short Term Market Trend: Up

Friday, May 16, 2008

Indices Continue Pullback

Oil, solar and coal, shipping, steel stocks are moving higher this morning with tech, financials and most other sectors moving lower. As long as these pullbacks stay above support consider these movements price fluctuation as opposed to change in trend. This extra volatility on options expiration Friday should have been expected as we stated in our post earlier in the week. FXE is bouncing off support this morning into its 30 DMA. Moving Up: FSLR, JASO, CNX, MEE, BTU, X, STLD, DRYS, CVX

Expiration Friday, Indices Pause at 200 DMA

Today is options expiration Friday for May contracts. After strong move up in the broad indices on Thursday, the indices are pausing at their respective 200 DMA with modest pullbacks in the first hour of trading. Take a look at the charts of the DJIA, SPX, COMPQ, NDX, RUT and SOX to see the pause at the 200 DMA in each of these indices. This is typical to find selling resistance at the 200 DMA after after a market has strong down trend like the down trend from October to January. Looking at the chart in detail, this pause appears more probable to be a temporary pause than a reversal point. Dave's Insight: Rember to trade the market, not your thoughts. Early Friday Action Moving Up: MTL, CNX, X, DRYS, FSLR, POT, MEE, CELG, IPI, CLF, GRMN, CF Moving Down: MA, STRA, DECK, PCLN, GS, AAPL, LEH, SOHU, EBAY Dave's Insight: When an stock is in an uptrend and is listed as Moving Down, watch for a potential support bounce entry.

Thursday, May 15, 2008

Markets Rally, Nasdaq Closes Above 200 DMA

DJIA + 94.28, +0.73% SP500 + 14.91, +1.06% NASDAQ Comp. + 37.03, +1.48% Russell 2000 + 7.31, +0.99% Support bounces and breakouts were in abundance today as indices and stocks moved higher after pulling back moderately yesterday. The DJIA, S&P and Russell 2000 finished at their 200 DMA while the Nasdaq and many individual stocks were breaking through their respective 200 DMA. This is a significant intermediate breakout with price targets that could put the indices near last year’s highs. More will follow on these price targets tomorrow. On the NYSE advancers led decliners 2,195 to 934 with 51 52 week highs and on 7 new lows. On the Nasdaq advancers led decliners 1,763 to 1,136 while ther were 28 52 week highs and 22 52 week lows.. Today’s Action Moving Up DRYS, CLF, POT, MTL, X, FWLT, MOS, SOHU, CNX, AAPL, MEE, BIDU, LEH, CF, GRMN, AGU, STRA, RIMM, AMZN, NUE, DECK, SCHN, MER, MON, IBM, MS, EBAY Moving Down CELG, GS, FSLR, IPI, ESRX Intermediate Term Market Trend: Up Short Term Market Trend: Up

Wednesday, May 14, 2008

Markets Rise and Pullback From Highs

DJIA + 66.20, +0.52% SP500 + 5.62, +0.40% NASDAQ Comp. + 1.58, +0.06% Russell 2000 - 0.78, -0.11% Today’s price action was almost a picture perfect inverse of Tuesday’s price action. Look at Wednesday’s candle compared with Tuesday’s on all four indices. Wednesday’s candle has an upper shadow while Tuesday’s candle has a lower shadow, both very similar in size. Also on Tuesday the Nasdaq and Russell 2000 were stronger with the DJIA and S&P weaker. It was the opposite on Wednesday with the Nasdaq and Russell weaker and the Dow and S&P were stronger. That being said all four indices had a higher low and higher high today. Obviously with the S&P, Nasdaq and Russell closing near the low end of their daily range and the DJIA closing just below today’s mid-point, we could be seeing the beginning of a short-term pullback. We’ll wait to see if markets hold and bounce in the morning or begin to move lower. Also remember Friday is options expiration and often we see extra price volatility without a change in trend. Our trend rating is still up. Today’s Action Moving Up STRA, FSLR, MON, NKE, POT, GRMN, IBM, DRYS Moving Down BIDU, MTL, AAPL, CNX, CLF, MA, RIMM, DECK, MEE, SCHN, SOHU, X, NUE, PCLN, FWLT, CF Intermediate Term Market Trend: Up Short Term Market Trend: Up

Stocks to Watch

Breakouts occurred in CNX, FWLT on Tuesday Stocks nearing potential breakouts on Wednesday morning: FSLR, DECK, ESRX, BRCM Support bounce potential: JASO Futures are higher before the market open. The trend is up. Dave's Insight: Remember to trade the market, not your thoughts.

Tuesday, May 13, 2008

Markets Rally From Short Term Support Levels

DJIA - 44.43, -0.34% SP500 - 0.54, -0.04% NASDAQ Comp. + 6.63, +0.27% Russell 2000 + 3.62, +0.49% The broad indices pulled back in early trading and then rallied with the Nasdaq Composite and Russell 2000 closing up, the S&P flat and the DJIA down slightly. There were several big movers in our stock list that we post on from day to day. All four indices had large white candles on Monday and each of the bounced near the S1 short term support level. The DJIA bounced near the mid-section of Monday’s large white candle and closed at its 20 DMA. There was a higher low and a lower high today resulting in an inside day. The S&P bounced today off both the mid-section of Monday’s large white candle and the old horizontal resistance (new support) from late January, early February through late April. Today’s candle formed both a higher low and a higher high. The Nasdaq Composite also bounced off the mid-section of Monday’s large white candle. Today’s candle formed a higher low and higher high and a new high close. This is the highest close in the Nasdaq since January 7. Today’s candle could be viewed as a potential hanging man (short-term bearish formation). If a pullback does occur it likely will be a short-term counter trend move. Dave’s Insight: Candles are one piece of technical information and should be interpreted in context of all the technical information on the chart. The Russell 2000 index was the strongest of the four broad indices on Tuesday. Its early morning pullback stayed well above the mid-section of Monday’s large white candle. Today’s candle was also a higher low and higher high and a new high close. The RUT closed above its January February resistance for the second straight day. Today’s close is the highest close since January 3. I’ll be sharing some price targets on these indices starting tomorrow so stay tuned to Chart Signals for even greater insight. I have been commenting in my advanced technical analysis audio commentary for the past three years and again last night to a separate audio audience on the importance of the PHLX Semiconductor Index (SOX) price action to the Nasdaq price action. Here is the bottom line. Since technology has chips inside, the strength or weakness of “chip” stocks has a significant influence of any sustainable trend in the Nasdaq index. The SOX was up 3.19 points or +0.79% today, more than the four broad indices. This was a higher low and higher high and a new high close. Also this is the highest close since December 31. In fact today’s close was just 1.73 points below the December 31, 2007 close. In other words the SOX could go positive year to date as early as tomorrow if it moves just 2 points! This suggests a probable continuation of the recent uptrend in the Nasdaq. Moving Up: FSLR, FWLT, CLF, CNX, SCHN, AAPL, X, JASO, MEE, DRYS, BIDU, IBM, DECK, ESRX, BRCM, PCLN Moving Down: POT, CF, GS, MOS, LEH, STRA, MA, MON, IPI, CELG, RIMM, MS, MER Intermediate Term Market Trend: Up Short Term Market Trend: Up

Markets Pause While Some Stocks Continue to Move

After a strong support bounce on Monday major indices are pausing on Tuesday morning. The DJIA is down -0.49%, the S&P -0.13%, the Nasdaq Composite -0.14% and the Russell 2000 is up +0.03%. Many individual stocks are continuing to move up: FSLR, FWLT, CNX, SCHN, AAPL, DRYS, MEE, DECK, BIDU, X, JASO, IBM and V. Stocks moving lower Tuesday morning include: POT, MTL, MON, MOS, RIMM, GS, LEH, CF, CELG, MA, MS and SOHU. Tuesday's price action appears to be typical price fluctuation and represents no change in our trend readings. Dave's Insight: Follow your rules when trading. Buy when you are supposed to buy and sell when you are supposed to sell.

Monday, May 12, 2008

Now That's a Support Bounce!

DJIA + 130.43, +1.02% SP500 + 15.30, +1.10% NASDAQ Comp. + 42.97, +1.76% Russell 2000 + 13.18, +1.83% Stocks and indices rallied on Monday. In classic fashion, indices retreated last week from a higher high to a higher low on Friday. After a moderate opening, indices found support in the area of horizontal and MA support on the charts and bounced. Many stocks and indices closed near their highs for the day. The DJIA, SPX, Nasdaq Composite and RUT all moved higher today and produced classic support bounce entry points. The DJIA, SPX and Nasdaq Composite each bounced off support in a broad rally. This confirms the recent breakout and suggests the markets have the potential for a significant run over the next few weeks. The RUT rose to resistance and closed with a new high close today. DIA, SPY, QQQQ and IWM each had a nice bullish candle formation and gave bullish entry signals. Moving Up BIDU, RIMM, SOHU, DECK, AAPL, DRYS, GS, MA, STRA, NUE, POT, CF, MTL AMZN, MON, MS SCHN, LEH, IBM, EBAY, GRMN X, CLF, MER, AA,CAT, DD, IBM Moving Down JASO, V, CELG, HPQ Intermediate Term Market Trend: Up Short Term Market Trend: Up

Support Bounce Starts 50 Minutes in Today's Trading

About 50 minutes into this morning's trading markets started to bounce. It appears that Friday's support levels are holding and the bounce is happening. The Russell and the Nasdaq are the strongest at this point (just before 11 am ET) followed by the Dow and S&P. BIDU, RIMM, DECK and SOHU are moving big. MA found support and is now moving higher. V is still down for the day. AAPL, AMZN, NUE, MTL, PCLN IBM and GS are moving higher. MON, MOS and POT have turned positive for the day, while AGU and IPI are bouncing off their early morning lows.

Monday's Early Action

Indices are slightly above or near breakeven in the first 30 minutes of trading. Credit card stocks MA and V along with agri/fertilizer/chemical stocks AGU, POT, MOS, IPI and MON are down in early trading. RIMM, DECK, BIDU and SOHU are moving up. Dave's Insight: Watch for a break above the high of the low day on support bounce charts.

Stocks to Watch for Monday

On the DJIA and Russell 2000 buying occurred on Friday near the 30 DMA. On the S&P the buying occurred near the 20 DMA and on the Nasdaq the buying occurred above the 20 DMA. Watch for sustained buying and a potential support bounce going into the new week on Monday. These stocks had chart patterns worth watching on Monday: Potential Breakouts FWLT, NOV, NVDA, CNX Potential Support Bounces BIDU, ESI, JASO, MA, MICC, NUE, V A change in my travel schedule interfered with posting this sooner.

Friday, May 9, 2008

Markets at Pullback to Support?

DJIA - 120.90, -0.94% SP500 - 9.40, -0.67% NASDAQ Comp. - 5.72, -0.23% Russell 2000 + 0.50, +0.07% The DJIA, S&P and Nasdaq indices fell today closing below recent support on the DJIA and S&P. The Nasdaq remained above support. Also notice that the Nasdaq closed down today but was up from the open and therefore today was a white candle. The Russell 2000 rose slightly and also displayed a white candle today. Take a look at the charts and notice where each index is at relative to horizontal support/resistance and the 30 DMA. The market is clearly testing the recent breakout and showing some signs of being at support. Stay focused on this key support area and watch for a bounce or break. Look for additional comments before Monday morning. Earnings FLR – 5/12 Today’s Action At Support Still ESRX Moving Up PCLN, FSLR, JASO, BUCY Moving Down ATW, V, MTL, FLR, BIDU, MA, V, NUE, CLF, X, AAPL, MON, DECK, SCHN, POT, IBM Intermediate Term Market Trend: Up Short Term Market Trend: Down

Indices Falling - Threatening Recent Support Levels

Entering the last hour of trading today, the DJIA and the S&P are falling below new horizontal support or the old horizontal resistance on the charts. Only the Nasdaq is holding above horizontal support at this moment. All four indices are still above their respective 30 DMA. Watch closely this key pivot point and trade accordingly. PCLN up $17 after positive earnings. FSLR and JASO rising. Yesterday evening I was flying east and no way to post. I will update after the close.

Wednesday, May 7, 2008

DJIA and Nasdaq Hold Above Support, S&P Moves Below

DJIA - 206.48, -1.59% SP500 - 25.69, -1.81% NASDAQ Comp. - 44.82, -1.80% Russell 2000 - 13.58, -1.86% All four major indices pulled back sharply today. The DJIA retests its breakout and holds. The S&P falls below support in the first test of its breakout. The Nasdaq holds above support in its first test of the resistance breakout. The Russell 2000 bounces down from resistance again. Watch the price action in context of the S1, S2 and S3 levels of last Thursday’s large white candle on each index. Reversing Tuesday’s positive price action, most of the stocks in our watchlist moved lower today. Many with short-term reversal candlestick patterns. Earnings ATW – 5/9 FLR – 5/12 Today’s Action Bearish Engulfing in Uptrend BUCY, GILD At Support Still ESRX Moving Up IBM, V, MTL Moving Down FLR, ICE, BIDU, STRA, SOHU, GS, DECK, MA, PCLN, AAPL, CF, MER, MOS, LEH, CELG, AMZN, MON, CNX, MS, JASO, FSLR, MEE, CLF, FWLT, EBAY, GRMN, X Intermediate Term Market Trend: Up Short Term Market Trend: Down

Tuesday, May 6, 2008

Markets Rally on Tuesday

DJIA + 51.29, +0.40% SP500 + 10.77, +0.77% NASDAQ Comp. + 19.19, +0.78% Russell 2000 + 5.44, +0.75% The Nasdaq index led the way as markets rallied today. Trading below Friday’s intraday high, the Nasdaq, S&P and Russell 2000 each had new high closes today. Only the Dow lagged and failed to make a new high close. We left our trend ratings at Up on Monday, as the pullbacks appeared to be price fluctuations and not a change in short-term trend. That view seems to be validated by today’s price action. Most of the stocks we watch rose today and only one moved down significantly which is indicating market strength in many individual stocks in addition to the market indices. The Chart Signals seem to be suggesting that the recent breakout is for real.

PCP rose 8.20 on positive earnings today. Today’s Action Breakout Holding BUCY, GILD, ICE At Support Still ESRX Support Bounce Follow Through FLR Moving Up FSLR, CLF, MA, POT, STRA, CF, SCHN, SOHU, CNX, AGU, DECK, MOS, V, NUE, JASO, AAPL, X, MON, FWLT, GRMN, IPI, MEE, MTL Moving Down BIDU Intermediate Term Market Trend: Up Short Term Market Trend: Up

Monday, May 5, 2008

Markets Modest Pullback

DJIA - 88.66, - 0.68% SP500 - 6.41, - 0.45% NASDAQ Comp. - 12.87, - 0.52% Russell 2000 - 1.39, - 0.19% The DJIA, S&P and Nasdaq pulled back today and stayed well above new support. The Russell which is just below resistance had the smallest pullback today. Watch the S1 level on Friday’s large white candle for a potential shift in the short term trend. POT, IPI and MON had nice support bounces today. MOS had a modest support bounce. Earnings PCP – 5/6 ATW – 5/9 FLR – 5/12 Today’s Action Breakout BUCY, GILD, ICE At Support ESRX Support Bounce FLR

Moving Up BIDU, X, CLF, POT, MA, MTL, CNX, MEE, AAPL, IPI, MON, NUE, V, SCHN, FWLT, AGU, CELG Moving Down FSLR, GS, DECK, SOHU, MS, AMZN, LEH, IBM, MER, UAUA Intermediate Term Market Trend: Up Short Term Market Trend: Up

Friday, May 2, 2008

Dow and S&P Rise After Jobs Report

DJIA + 48.87, +0.37% SP500 + 4.56, +0.32% NASDAQ Comp. - 3.72, -0.15% Russell 2000 - 4.01, -0.55% The jobs reports showed a loss of 20,000 jobs in April compared with an estimated loss of 80,000 jobs. Unemployment fell to 5.0% in April from 5.1% in March compared with an estimate of 5.2%. Both reports were better than expected. Oil rose to $116.32 a barrel. The DJIA, S&P and Nasdaq sold off from the their early morning highs and finished well above both their respective breakout points (now support) and above the S1 support of Thursday’s large white candle. The Russell 2000 bounced down from resistance and stayed above the S1 support of Thursday’s large white candle. We have changed our intermediate term trend reading to up. Support bounces occurred in AGU, MOS and POT today. Today’s Action Moving Up FSLR, MTL, X, AGU, CNX, POT, CLF, CF, SOHU, MOS, MEE, MON, SCHN, GS, AAPL Moving Down MA, BIDU, STRA, V, AMZN PCLN, ESRX, DECK, FWLT Intermediate Term Market Trend: Up Short Term Market Trend: Up

Thursday, May 1, 2008

Breakout - A 13,750 DJIA Target?

DJIA + 189.87, +1.48% SP500 + 23.75, +1.71% NASDAQ Comp. + 67.91, +2.81% Russell 2000 + 13.57, +1.89% Like April, May begins with a bang! The Nasdaq moves a monster 2.81%. Friday will show us if this breakout is for real as it appears to be. Unemployment and non-farm payrolls are due before the market open. If this breakout holds the chart is giving a target of 13,750 on the DJIA. There is a great market lesson in today’s move. One of the core principles of technical analysis is that market action discounts everything. We have been writing and commenting in our audio comments that the price action at resistance over the past 8 days has been different than in the prior three months. Why? Apparently buyers were absorbing selling at higher prices for more days than anytime in the last three months. Were the clues in the Chart Signals? Yes. Did the chart know the future? No. But did the chart suggest that buyers were doing something different now and therefore a trend change was becoming a higher probability? Yes. Dave’s Insight: We must never confuse probability with certainty. Always think in terms of probability and maintain mental flexibility. Today’s Action Moving Up AAPL, ADBE, APOL, LAMR, MICC, SNDK, SYMC, VRTX, MA, STRA, GS, SOHU, DECK, BIDU, IBM LEH, MER, GRMN, V, CELG, UAUA, ESRX, NKE, BRCM Moving Down FSLR, MTL, CLF, IPI, X, NUE, CF, SCHN, JASO, MEE, POT, CNX, AGU, MON Intermediate Term Market Trend: Neutral to Breaking Out Today Short Term Market Trend: Up

The Trend Change the Chart Signals Have Been Suggesting?

Just stepped off the plane on the east coast just in time to see our support bounce (DJIA & Nasdaq) and a DJIA move to the 200 DMA. The S&P is breaking resistance and the Russell 2000 has moved right to its resistance level. The market is not closed and the non-farm payrolls and unemployment reports will be out in the morning, but this does look like the breakout and trend change the Chart Signals have been suggesting for the past several days. If the market closes up our short-term trend reading will be up and if the market continues to move up tomorrow we will likely change our intermediate term reading to up also. There is still a chance that the market will pull back today or tomorrow, but at this moment this is looking like the potnetial trend change we have been discussing for several days. I'll post later after I get my room and I can review all the Chart Signals. UP Before the Close MA, STRA, GS, SOHU, AAPL, DECK, BIDU, MER, IBM, LEH, GRMN, MS, V, UAUA, CELG, NKE