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March 21, 2009  11:30 a.m. PST

long term indicator:  mixed 

The markets reached the 50 day moving average, our short term target,  and have pulled back.  Thus far this is normal consolidation during a rally, however, continued selling thru tomorrows close will be cause for concern that the rally is in jeopardy.    

March 17, 2009  8:30 p.m. PST

long term indicator:  mixed 

The Nasdaq Stock Market is rapidly approaching the 50 day moving average, our medium term target (see March 11 report).  The 50 dma  has been a line of resistance in recent past and that line combined with some shortest term overbought indicators signal a potential period of consolidation ahead.   The market will determine if the recent short term rally is a more significant trend or if the market will return to the previous main trend downward.    

March 12, 2009  8:50 p.m. PST

long term indicator:  negative 

After an early morning pull back the market continued it's rally with another huge gain.  The market has been climbing at a fast rate, another rally like today's will likely put the market in a several day consolidation phase as some investors take "some money off the table", investors entering the rally if a run up happens tomorrow will likely be whip-lashed  when the market pauses and consolidates.       

March 11, 2009  8:45 p.m. PST

short term indicator: mixed 

medium term indicator: positive 

long term indicator:  negative 

The good news is the rally didn't  reverse today.  Tomorrow the market will likely at some point pull back and offer an entry point for those believing the rally will continue.  Medium term projection remains that the market will continue to rally to at least the 50 dma.  This is a high risk period of time.   

March 10, 2009  9:00 p.m. PST

short term indicator: positive 

medium term indicator: positive 

long term indicator:  negative 

Market shows signs of life again on the Citibank optimism from their CEO.  This sparked a rally as most were dreading the looming date of Citibank closing business.  This change in perception along with Fed Chairman Bernanke comments started a rally.  Our medium term projection is for the market move upward toward the  50 day moving  average or the red line on the chart below.  Warning:  sometimes these one day rally's fail to stick and the market retests the lows, see for example the October 13, 2008 rally attempt.

March 8, 2009  4:00 p.m. PST

short term indicator: mixed 

medium term indicator: positive 

long term indicator:  negative 

Pessimism has been approaching an extreme in terms of the stock market.  That could be good for those long in stocks should those perceptions be altered to the other direction by a fraction or two.  Our medium term indicators now signal the market is rapidly approaching or at a bottom.  In the short term our indicator is mixed as sometimes the bottoming can be a rocky road.  The phrase "buy on weakness" comes to mind.    The Nasdaq punched below intra-day support on Friday but closed near levels that may offer support going forward.

March 4, 2009  4:10 p.m. PST

short term indicator: mixed 

medium term indicator: mixed 

long term indicator:  negative 

Dow Loses Support, Indicators say Stock Market getting Oversold

February 21, 2009  3:10 p.m. PST

medium term indicator: mixed

long term indicator:  negative 

On Friday, February 20th, the Dow Jones Industrial Average lost a key support at 7449 as worry that the banks may become nationalized.  The S&P 500 and Nasdaq are still above their key support levels.   Several of the indicators including Volume, New Highs vs Lows and Relative Strength Index, RSI, are signaling the market is getting oversold and due for a rebound.  The market tends to have a fear spike at theses type of bottoms, some traders look for a spike in the VIX or free fall of morning futures.  Trading in these markets can be gut wrenching as volatility tends to send prices to extremes. 

February 18, 2009  4:31 p.m. PST

short term indicator: positive

medium term indicator: negative

long term indicator:  negative 

The Stock Market appears to be hesitating in it's downward trend.   Today's housing starts news was terrible, yet the market seemed to take it in stride.  Today's candlestick pattern is similar to a doji star,  a term used in Japanese candlestick pattern followers to describe a point of indecision in the trend.  The price action includes a long selling candle followed by a candle with tails on each end and no significant body.   A doji star is considered a reversal candle if the trend switches directions following the star.  For example, during a downward trend the buyers and sellers even out at the end of the day giving consideration that the selling pressure is waning and the buyers can take over again.   The Dow also maintained levels above the intra-day and close of the day support levels.  Caution is advised as the market has not been very kind to those trying to time a reversal, sometimes it's better to use the anti-prevailing trend movements to take positions with the prevailing trend.  Count the number of opportunities in the last five months of 1 to 6 day rally attempts that would have been opportunities to take positions that benefit from the prevailing wind. 

Dow Jones Industrial Average Stock Market Testing Lows of November 2008

February 17, 2009  9:10 p.m. PST

short term indicator: positive

medium term indicator: negative

long term indicator:  negative 

The Dow Jones Industrial Average closed one point above it's previous closing low in November 2008. These are typically areas where support is found and are sometimes locations of upward bounces. Tomorrow the Dow will potentially be able to use two points of support. The intra-day low in November of 7449 or today's closing low of 7552 matching the closing low in November. Should the Dow break below these levels the new lows taken out will be from 2002.

Some investors take long positions right above a level of support hoping for a upward bounce. This type of investing can be challenging because firstly the investor is fighting the prevailing trend, so it often becomes a timing issue of how long to hold the position on the bounce and secondly, if the index continues the prevailing trend and falls thru the support the free fall effect can be devastating as the market is deluged with investors all selling their long positions with the failure of support. Bear Stock Markets systematically take out previous lower lows by breaking below support levels, Bull Stock Market Cycles systematically take our previous higher highs by breaking above previous higher highs.  The lines below indicate some of the recent lows taken out by the Bear Market Cycle.   Tomorrow the bulls will likely attempt a support line rally, (unless the news is so bad they never get a chance)  but will it hold or just be a short term "dead cat bounce" in the middle of a Bear Market.

More examples of the Bear Market taking out lows.  Count the number of times since October 2007 that the Market has wiped out support lines.  

February 14, 2009

short term indicator: mixed

medium term indicator: negative

long term indicator:  negative 

The stock market has had recent up-trend trouble.   The S&P 500 index has tested the 50 day moving average on four occasions in the last three months.   This type of price action does not bode well for an uptrend.  Worse yet, the recent news about the progress of the economic stimulus hasn't seemed to improve the chart.  

The Dow Jones Industrial Average looks even worse as the index didn't even have the trend strength to make it to the 50 day moving average before it reversed in January.  Since the beginning of January the Dow has made three lower lows and two lower highs.   These are traditional signs of a continuing bear stock market.

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