Discussion in 'Trading' started by mrswing, Mar 29, 2004.

  1. mrswing



    Now and then I will provide some general insights on market activity, based on my analysis of pattern and retracement, which I think will be helpful for perspective. This is NOT designed to provide specific market recommendation. It is designed to get you to understand generally what the market is doing, and to improve your ability to understand concepts of support, resistance, and market movement.

    Further analysis of that ORCL trade will show up later today.

    I actively track the upper half of market capitalization stocks in all three major U.S. indices for momentum, and then I begin pattern analysis from that.

    To see the complete calculations, please refer to the QUICKIE MARKET COMMENTARY – MARCH 16, 2004 for the full details.

    The floors mentioned in the QUICKIE MARKET COMMENTARY OF MARCH 16, 2004 are again still in play. What is interesting is on a daily basis, all of the indices are flirting with penetrating the 20-period moving averages of their Bollinger Bands after having penetrated them moving toward the lower bands. That is not particularly bullish, because overhead resistance has to be penetrated in order for a new rally to start in earnest.

    The stock market is in a bit of a quandary at present given concern about inflation, interest rates and jobs. If the Friday U.S. employment numbers show up closer to the 150,000 monthly new jobs level that the Bush Administration is targeting, fears of inflation could kick in. Reaction to a strong employment number might cause the U.S. bond market to drop on Federal Reserve interest rate hike fears. The equity markets might react negatively as well as Price/Earnings ratio compression could result from investors finding safe haven in the higher rates of return of fixed income vehicles. The bottom line is that the market has little to allow it to rise in the current environment and several potential strikes against it if the economy heats up.

    For the $INDU (Dow Jones Industrial Average): Monthly momentum is negative, though the weekly charts are in extreme oversold areas. The $INDU needs to clear out this last week’s high 10271.78 to keep a sustainable rally going. Before the notable resistance of 10634.29, 10464 and 10588 could become Fibonacci retracement resistance levels. The weekly charts tend to favor a near-term rally, but the general tenor of the $INDU is still a bit bearish.

    For the $SPX (Cash S&P 500 Index): The same scenario for the $SPX exists as it exists for the $INDU (weekly oversold, monthly negative momentum). 1115.27 needs to be taken out on the upside for any potential rally to have a chance. 1125.50 is also fairly firm resistance, but the retracement resistance levels at 1134 and 1147 could also be major roadblocks. The weekly charts tend to favor a near-term rally, but the general tenor of the $SPX is also still a bit bearish.

    For the $COMPQ (NASDAQ Composite): The same scenario exists for the $COMPQ (weekly oversold, monthly negative momentum). Here again, for a new rally to get going, the old weekly high has to be taken out (1976.76) to the upside. 2011.83 would be a big hurdle to have to be removed, and there are still Fibonacci retracement resistance levels around 2003 and 2032. The weekly charts tend to favor a near-term rally, but the general tenor of the $COMPQ is also still a bit bearish.

    Remember, we CANNOT PREDICT where the market will be with perfect accuracy. What we can do, however, is understand that, based on patterns that constantly repeat over time in markets, we can make some pretty decent estimates and plan our trades once we see these patterns confirmed in the charts. There is no reward without risk, but there IS always RISK.

    More later.

    ...thanks for the trust you've shown in me and my business.

  2. surely you jest, " monthly momentum is negative", "general tenor is negative". are you looking at last year's market ??

    LOL !