Here's a look at the market on Jan 26 2007 Dow Daily pretty much sums up where the overall market sits currently: http://img106.imageshack.us/img106/7605/dowdailyjan262007fq7.png We formed a base on the last higher low then rallied a bit but we ended up closing right below a critical resistance on Friday: Dow60min http://img259.imageshack.us/img259/9048/dow60minjan262007up3.png S&P60min http://img481.imageshack.us/img481/4435/sp60minjan262007pngfk6.png Shorts paying attention to the Advance-Decline chart would've realized we weren't going any lower by Friday noon: http://img259.imageshack.us/img259/3535/adnysecn5.png
Here's a look at the market on Jan 29 2007 All in all, the broad market continued the rally initiated on Friday afternoon, but the strength dissipated in the afternoon and we ended up coming back down to where we started this morning, forming a candlestick called a gravestone. Though the formation has a reversal implication, what happens after it is usually more important, as it also suggests that there was a stream of buyers during the earlier part of the day (as an example, we formed a huge gravestone in late August, which seemed bearish after 3 months of weakness in the market - the next day we gapped up 50 points on Dow and never looked back since). Since NDX has been below 50MA for a few days now, one might say it's about time Dow and S&P tested theirs as well. Nevertheless, the market today lacked any momentum, up or down - perhaps we will see a more definitive movement after the Fed. Until then, fade and scalp seem to be the order of the day. S&P 60 min http://img404.imageshack.us/img404/3417/sp60jan292007fq5.png Dow 60 min http://img329.imageshack.us/img329/8111/dow60jan292007ag8.png Advance-Decline On NYSE (15 min) http://img329.imageshack.us/img329/3734/adjan292007cv6.png
The market has been consolidating in a tightening fashion and may gyrate in a widening range through the economic news, the fed and some major (i.e. GOOG, XOM) earnings before a consensus is reached. What to watch out for is that even though S&P recovered nicely from last week's sudden sell off and looks poised for another run up, it has retraced exactly 50 percent from last week's low, and if (and only if, for it may be yet another base before another runaway rally) the current wedge formation breaks to the downside and we progress through a series of lower lows on 60 min, it could be a confirmation that we have a ST downtrend that may last a few weeks. S&P 60 min http://img176.imageshack.us/img176/2874/ensignjan302007ko2.png Dow 60 min http://img258.imageshack.us/img258/5161/ensign1jan302007zu2.png NDX 60 min (so far, from a fakeout rally to sudden sell-off, NDX has been leading the other 2 indices but it too is currently directionless). http://img409.imageshack.us/img409/3937/ensign2jan302007qq7.png
The rally today has brought S&P and Dow to the high end of the currently 2 month old trading range. It remains to be seen if today's action can be sustained: S&P 60 min http://img186.imageshack.us/img186/7051/sp60jan312007ef5.png Dow 60 min http://img257.imageshack.us/img257/9013/dow60jan312007hc3.png S&P Daily http://img186.imageshack.us/img186/1225/spdailyjan312007cm8.png Dow Daily http://img294.imageshack.us/img294/8562/dowdailyjan312007nl9.png NDX still seems to be looking for a catalyst: http://img186.imageshack.us/img186/5476/ndx60jan312007uh9.png
Here's a look at the market on Feb 1 2007 S&P had a belabored run up today as a follow through to yesterday's rally (albeit it looks all pretty on a chart with a pennant and then a late day break out). I expect the run up to continue a tad bit more before doing some retracement. If we gap up strongly tomorrow on the jobs report, I suspect that the morning high will be the turning point, while if we gap down, we will likely grind higher all day and form the top either late Friday (the all too familiar short covering at the market close) or early Monday. The target area is around 1450 on SP and low 12700s on Dow. These are just my guesses based on trendline and wave analysis. I'm not exactly sure how much more upside we have left - I'm personally used to the sideways market of the last 5 years so I've some downside bias at the moment, but then again, Dow has had periods in the past where it doubled its value within a few years time and though current fundamentals don't exactly seem pretty enough to support such a run up, the market has done a lot more irrational things than the current state - a cyclical dominated runaway market with minimal retracements. Daily Charts: Dow http://img518.imageshack.us/img518/1693/dowdailyfeb12007pj1.png NDX and S&P juxtaposed http://img518.imageshack.us/img518/8451/spndxdailyfeb12007vb8.jpg 60 Minute Charts: Dow http://img455.imageshack.us/img455/2237/dow60feb12007fh5.png S&P http://img162.imageshack.us/img162/713/sp60feb12007lw6.png NDX (more or less the same as yesterday - a deadbeat) http://img518.imageshack.us/img518/4948/ndx60feb12007nh9.png
Intra-Week Chart Analysis Here's a look at the market on Feb 2 2007 The market consolidated with S&P showing a positive bias and Dow exhibiting a negative bias but both within a neutral range after the Fed induced rally. It was a slow day other than the range making done in the morning and also a little stop-fishing by market participants which worked out nicely yesterday but 1450 on S&P cash (1454 on ES) proved to be a hard nut to crack. Perhaps we'll have a go at it one more time on Monday on the ISM Services number (usually worry-free unlike ISM Manufacturing which has been on border line contraction lately) and if we don't take out the resistance by then we may consolidate at a lower level. Dow Daily: http://img256.imageshack.us/img256/4683/dowdailyfeb22007rc6.png Dow 60 min - forming a pennant: http://img256.imageshack.us/img256/2817/dow60feb22007ak3.png S&P Daily: at this point one has to do some data-mining to find levels that may even remotely act as resistance. I'll be studying weekly and monthly charts over the weekend to get a clearer picture: http://img300.imageshack.us/img300/899/spdailyfeb22007um1.png S&P 60 min - channeling upward: http://img300.imageshack.us/img300/9945/sp60feb22007lh8.png NDX - still indecisive and chugging along sideways: http://img256.imageshack.us/img256/3198/ndx60feb22007rj1.png
Here's a look at the market on Feb 3 2007 All indices consolidated in a tight range so there is nothing much of note on daily charts. ES volume was also on the low side. Perhaps Chicago traders didn't feel like waking up today. On a short term basis S&P was once again held back just shy of 1450 (which is currently the ST top of significance) but it, along with the Dow, is finding some firm footing above previous highs. We are forming triangle patterns on indices after a major rally (NDX is still the wild card) and it may suggest that barring the unforeseeable, another rally is around the corner, however major that may be. It certainly looks like whoever bought at the close and spiked the futures back to near the high of the day as a result must be thinking we're going much higher from here. Historic times. S&P 60 min http://img471.imageshack.us/img471/7572/sp60po8.png Dow Futures (YM) 60 min http://img185.imageshack.us/img185/8383/ym60xx0.png *There is a website http://www.bullandbearwise.com/ that I often visit that implements a point system on economic numbers to gauge the current state of the U.S. economy. I think the method is simple yet ingenious.
Here's a look at the market on Feb 6 2007 Today's shallow dip was once again met by steady buyers. Advance-Decline never fell below 0, despite the price decline in the morning and the fact that indices were negative most of the day. Cisco's positive forward guidance afterhours has a broad implication, especially for tech stocks, in that Cisco is an infrastructure provider for many companies that are dependent on consumer demand. The market may go into a profit taking mode tomorrow but seeing the resilience of the buyers, I'm inclined toward another leg up (even though I'm of the opinion that a run away bull market that keeps running away will have more problem when the downturn comes - because everyone is long and there is no short left alive that can support the market as it tumbles down!). S&P is being held below 1450, but it is not being met by any heavy sell offs - just hesitant buyers. So far, the Chinese stock market correction since last week is being overlooked even by its Hong Kong counter-part and Nasdaq just showed an intraday reversal characteristic after weeks of weakness. I'm reading a quote on Stock Trader's Almanac that reads: "Sell stocks whenever the market is 30% higher over a year ago" (Eugene D. Brody of Oppenheimer Capital). Oh well, I suppose we're still shy of Mr. Brody's benchmark. S&P Daily http://img256.imageshack.us/img256/9783/spxdailyfeb62007qg6.png 60 min http://img295.imageshack.us/img295/152/spx60feb62007av0.png Dow Daily http://img295.imageshack.us/img295/3908/dowdailyfeb62007wf7.png 60 min http://img295.imageshack.us/img295/9062/dow60feb62007lk8.png NDX 60 min http://img295.imageshack.us/img295/2808/ndx60feb62007jl6.png A runaway bull market (credit to http://www.underthecounter.net/) http://img167.imageshack.us/img167/3497/bearroadkillaf8.jpg
Here's a look at the market on Feb 7 2007 Gauded by NDX, S&P and Dow made higher highs but their move up was like watching a tortoise in a race. . . in slow motion! Advance-Decline never crossed above 1000 (usually not a good sign for a sustainable rally) and when it started deteriorating despite S&P's new intraday high during lunch, we had some test to the downside. However, volume was light on the way down and indices recovered by the end of the day. Indices are looking a bit toppy and couldn't muster a bona fide breakout today but they are at the same time being supported at every downturn. Dow Daily http://img396.imageshack.us/img396/6302/dowdailyfeb72007cb6.png 60 min http://img251.imageshack.us/img251/1596/dow60feb72007qs7.png S&P Daily http://img396.imageshack.us/img396/4552/spdailyfeb72007dc8.png 60 min http://img472.imageshack.us/img472/6641/sp60feb72007cd5.png NDX Daily http://img251.imageshack.us/img251/4407/ndxdailyfeb72007nh9.png 60 min http://img396.imageshack.us/img396/8899/ndx60feb72007to6.png
Here's a look at the market on Feb 8 2007 Dow led the market down in the morning and it looked as though the money withdrawn from the likes of BA and MO was being put into small caps and tech issues (we had a modest Advance Decline to the downside but with Dow down more 100 pts at one point). The U.S. market came back quite strongly in the afternoon, however, and at 3 PM, some buy stops were triggered at the S&P opening price and we had a little spike that filled the morning gap. It remains to be seen if the change of market leadership from the mega caps to small caps can spur a sustainable rally. Dow 60 min http://img240.imageshack.us/img240/2355/dow60feb82007kd9.png S&P 60 min http://img240.imageshack.us/img240/2/spx60feb82007hg0.png NDX 60 min http://img240.imageshack.us/img240/7108/ndx60feb82007uh9.png NDX Daily http://img177.imageshack.us/img177/4273/ndxdailyfeb82007vm8.png