latest stock market analysis at stock-market-101.com
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Market Indicators showing extreme oversold, reversal pending
July 15, 2008
short term indicator:
mixedmedium term indicator: positive
long term indicator: mixed
Indicators are showing extreme oversold conditions, which doesn't necessarily mean they can't go lower, however, in terms of previous occurrences it is at the extreme end of the scale. Swelling Volume and New Highs and New Lows ratio indicating a reversal pending. Expectation of potential high volatility as more bad news will send the market into gyrations.
VIX has been steadily climbing since our last report. VXN a reading of nasdaq volatility is already in range of previous reversals. In addition, the market touched upon a previous low close during a bout of selling today. The VIX blow off top doesn't appear to have been reached, in other words, investors should not be surprised by significant volatility in the next few days, especially considering options expiration week and major bank earnings this week.
The next rally leg may be a shorter term of a longer correction fed by dropping commodities prices.
Market Now Showing Signs of Trend Reversal
July 9, 2008
short term indicator:
mixedmedium term indicator: mixed
long term indicator: mixed
Five out of Six indicators are now showing a pending medium term reversal of market trend. The last remaining indicator trigger will likely be a VIX spike led by a surge in oil prices. Oil's price last gasp upward will then likely reverse sharply buoying stock prices for another rally leg.
The Stock Market has been in a steep downward channel that has shown signs of an acceleration downward. Typically this is the last phase of the near term downward movement. It remains to be seen if this will be a short term counter trend or a longer term trend reversal.
Oil has been on a very lengthy bull run that has recently started trending upward at an accelerated rate. This is typically the last phase of the upward movement. The last run sometimes ends with a last gasp upward. West Texas Light Crude rising over $150 -156 per barrel would likely trigger this reversal.
A VIX spike over 33 would trigger the final indicator of the reversal.
Economic News Poses Volatility
Wednesday May 28, 2008
short term indicator:
mixedmedium term indicator: mixed
long term indicator: negative
Tomorrow's release of GDP, Jobless Claims, Help Wanted Index are likely to create a volatile session tomorrow. The Markets are in or close to their lower channel boundary. A negative GDP surprise will likely cause the markets to loose their channel and continue the rollover started when the market tested the 200 dma in early May.
Channeling or Trend Reversal
Tuesday May 20, 2008
short term indicator:
positivemedium term indicator: mixed
long term indicator: negative
Potential A.M Rally as we approach a lower channel boundary of the Dow Jones and Nasdaq. The market may bounce off the dashed channel line tomorrow. The question of the moment is the market in a channel boundary or experiencing a more major trend reversal.
Dow and Nasdaq are pulling back from 200 dma gains
Monday May 19, 2008
short term indicator:
negativemedium term indicator: mixed
long term indicator: negative
Tomorrow the Producer Price Index will be delivered before the market opens. If wholesale prices of goods are going up as indicated by the headlines the consensus estimates of inflation could be in for a negative surprise on Tuesday.
Short Term Indicator Showing Extreme Level Overbought
Thursday May 15, 2008
short term indicator:
negativemedium term indicator: mixed
long term indicator: negative
One of the indicators for the Nasdaq just hit levels extreme overbought levels not seen since last October, near the multi year high. The stock market hitting extreme overbought combined with the proximity of the 200 day moving average could be a potential location of significant reversal. Nasdaq closed slightly above the 200 dma, Dow and S&P 500 sit just below their 200 dma. Of course these indicators are not always accurate predictors of the future.
The Chart below shows the VIX or Volatility Index overlayed with the Dow Jones Industrial Average. Note how the Relative Strength is hitting overbought levels similar to October 2007, the near the last multi year high. The spikes in the VIX relate to the extreme oversold levels and the troughs in the VIX relate to the overbought levels of the Dow.
Nasdaq tests and retreats on 200 day moving average
Wednesday, May 14, 2008
short term indicator:
negativemedium term indicator: mixed
long term indicator: negative
The Nasdaq Stock Market tested the 200 day moving average today and retreated south. Today's candlestick pattern has the look of a shooting star. A shooting star is defined as a candle that gaps higher rises higher then closes below the opening price. Note how the candle has turned black at the bottom . That means although the index did not close negative, it did close lower than the opening price. The thin line above the indicates the index tested that area during the day. A shooting start during an upward trend market can be considered a potential bearish reversal signal among chartists. The Dow Jones Industrial Average also rose almost to the 200 day moving average before retreating. Now both the Dow and Nasdaq have touched their 200 day moving averages we will likely see a
Stock Market Potentially Reversing Trend on 200 day moving
average Thursday, May 8, 2008 short term indicator: mixed
medium term indicator: mixed
long term indicator: negative
The Dow Jones Industrial Average has for the moment reversed
trend on the 200 day moving average. The Nasdaq hasn't yet hit its 200 day
moving average. Stock Market Continues to be at critical junction near 200 day
moving average Tuesday, May 7, 2008 short term indicator: negative
medium term indicator: mixed
long term indicator: negative
The Stock Market has closed right below the 200 dma with our
indicator signaling short term trend reversal. Stock Market Continues to be at critical junction near 200 day
moving average Friday, May 2, 2008 short term indicator: negative
medium term indicator: mixed
long term indicator: negative
The chart below is an example of challenges the market
experiences when it approaches a downward sloping 200 day moving average.
The index attempted to break above the 200 day moving average (green line)
on three occasions in 2004 before finally staying above the 200 dma on the
4th attempt. Note the similar deep correction followed by sharp recovery in
October to December of 2004. The recent nasdaq stock market run from March
to May 2008 has a similar pattern. Stock Market Appears Overbought with Major Potential Overhead
Resistance Thursday, May 1, 2008 short term indicator: negative
medium term indicator: mixed
long term indicator: negative
The Stock Market has done an exceptional job of
fighting off the bad news surrounding the housing industry rallying from a steep
correction all the way back to just below the 200 dma. Market
Pundits are claiming we've hit the bottom and the correction is over, however,
the 200 day moving average is still sloping downward and the rally below the 200
day appears by the indicator to be overbought at least in the short term.
Tomorrows unemployment number may send the market into serious gyrations as
optimism may collide with pessimism.
Long Tail Could Signal Ominous Trend Reversal Wednesday April 30, 2008 short term indicator: negative
medium term indicator: mixed
long term indicator: negative
The market almost made it to test the 200 day moving
average. A long tail at the end of an upward trend could signal the beginning
of a trend reversal in the down direction DOW retreats from Resistance but
Finds Support from Previous Resistance Thurdsay, April 24, 2008 9:05 p.m. PST
short term indicator: negative
medium term indicator: mixed
long term indicator: negative
Nasdaq retreats from Resistance Monday, April 22, 2008 8:47 p.m. PST
short term indicator: negative
medium term indicator: mixed
long term indicator: negative
Market is retreating from resistance line. Indicator
showing tilt for more selling ahead. Look for Ambac Financial
results, Apple Computer, Amazon, QCOM and oil inventory information release for
market direction tomorrow. Nasdaq bumps Resistance Monday, April 21, 2008 9:36 p.m. PST
short term indicator: negative
medium term indicator: mixed
long term indicator: negative
Indicator continues to show overbought signal. Existing
Home Sales data tomorrow will shed further light on the status of trend of the
housing resale. Lot's of earnings information this week for the markets to
digest include tomorrows Dow components Dupont, DD and McDonalds, MCD. Stock Market May Face Resistance Ahead Sunday, April 20, 2008
12:06 p.m. PST
short term indicator: negative
medium term indicator: mixed
long term indicator: negative
The Nasdaq Stock Market may be facing some resistance to moving
higher in the next few days. The Stock Market has stalled on previous two
attempts to break above the 2425 barrier. Our indicator is signaling the
market is already reaching for "overbought" territory and it may have
difficultly putting together a continued rally that builds on the current four
day trend. Several leading corporate banking officers are indicating that
the worst of the liquidity crisis seems past and now bank lending between
institutions is improving. On the other hand the housing side of the
economy is still is struggling as indicated by dismal results last week for
housing starts and building permits. On Tuesday Existing Home Sales data
will be distributed to the market a half hour after trading starts. It
should make for an interesting day. Stock Market Investors Await Consumer Price Index,
Housing Starts and Earnings April 15, 2008
8:33 p.m. PST
short term indicator: mixed medium term indicator: negative
long term indicator: negative
The Stock Market is poised to change direction
rapidly in the next three days as a great deal of financial information will
have to be quickly absorbed. The Consumer Price Index will be of
particular concern tomorrow. If the CPI shows signs of rising rapidly it will
limit future federal reserve action on interest rates. Housing Starts will
help investors determine just how bad things are in the housing industry and
major Dow and tech heavy components will release earnings over the next three
days. Tomorrow(wednesday) widely held stocks like JPMorgan, IBM, Coca Cola
and Ebay, Thursday Merrill Lynch, Google and Friday Catepillar, Citigroup,
Xerox, and Honeywell.
Specializing in stock market information
"Those who cannot remember the past are condemned to repeat it"
STOCK MARKET INFORMATION ON THIS SITE IS NOT INTENDED AS TRADING ADVICE. STOCKS ARE RISKY, YOU
MAY LOSE EVERYTHING YOU INVEST OR MORE DEPENDING ON THE TYPE OF
INVESTMENT. THE EDITOR OFTEN TAKES POSITIONS IN THE MARKET THAT ARE NOT
DISCLOSED. A STATISTICAL ANOMALY OR OCCURRENCE DOES NOT NECESSARILY
IMPLY SOME FUTURE DIRECTION. SUMMARY OF STOCK MARKET 101 ANALYSIS: Stock Markets are cyclical in nature. A great deal of
effort has been put forward to timing the start and end of bull and bear markets
and market corrections. After review of almost every correction of the Dow
index corrections since 1928 a distinct pattern developed. We analyze a
variety of indicators for a short term, medium term and long term outlook:
Weak Market stays under 10 and 50 dma
April 14, 2008
9:46 p.m. PST
short term indicator: mixed medium term indicator: negative
long term indicator: negative
Tomorrows Producer Price Index and Housing Market Index might
provide some trading action. Washington Mutuals earnings release after the
bell tomorrow may be interesting. Last month they had a 61% negative
earnings surprise.
Reading the Tea Leaves
April 12, 2008
6:00 p.m. PST
short term indicator: mixed medium term indicator: negative
long term indicator: negative
Short term indicator is reading oversold condition. Unless
the Monday morning release of Retail Sales or Business Inventories is really
discouraging, the markets should be in for an attempted rally on Monday
morning. The afternoon could be a different story, so the short term
indicator is reading mixed.
April 11, 2008
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Dow, Nasdaq, and S&P indices close below their 10 and 50
day moving averages
April 11, 2008
10:00 p.m. PST
short term indicator: mixed medium term indicator: negative
long term indicator: negative
All of the major stock exchanges lost support of their 10 day
and 50 day moving averages. The VIX and VXN moved above their 200 day
moving average. General Electric, GE, kicks off earnings season with a
"air ball" but it is only the first Dow component and next week others
will get a chance to provide a thrill like earnings releases on Tuesday,
Washington Mutual, WM, and Johnson and Johnson, JNJ, and Wednesday, EBAY,
JPMorgan and Wells Fargo.
Nasdaq Stock Market regains support of 10 day moving average
April 10, 2008
8:40 p.m. PST
short term indicator: mixed medium term indicator:
mixed
long term indicator: negative
The Dow Jones Industrial Average is for all practical purposes
been unchanged for the last week of trading. Today's close of trading was
near the same level six days ago and very little trading range has occurred in
the last six days. One large up day seven days ago followed by medium
consolidation has provided the moving averages a chance to align themselves for
a better chance of a future gains. Lack of volatility has provided the VIX
(Volatility Index) a chance to fall below it's 200 day moving average while the
VXN (Nasdaq version of Volatility Index) is sitting right on top of the 200 day
moving average.
Nasdaq Stock Market loses support of 10 day moving average
April 9, 2008
8:00 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
After several days of trending sideways the markets have started
to list downward again. Perhaps tomorrows jobless claims report will send
the market in a new direction. The consensus estimate is for 386,000
jobless claims and a report that is significantly different may put some fire
behind traders positions. Today the Nasdaq lost support of the 10
day moving average. Other major market averages are hovering just above
the 10 day moving average.
Stock Market still lacking conviction on long side or short
side.
April 8, 2008
7:40 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
The good news is for investors holding long positions is that
the most recent news didn't initiate a huge wave of selling. The negative
news could have easily pushed the market much lower today. Headlines like
the worst pending sales reading since the measure was created is a good
indicator that the housing correction is still
continuing..
Stock Market has Fourth Day of of Indecision
April 7, 2008
6:00 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
The last four days of trading have had the markets close in a
narrow range giving the feeling that the markets can't decide what to do.
On one had the spread of the cost of borrowing money between commercial
institutions has eased giving the markets relief that the credit crisis is
drawing to a close. One the other hand the tallying of devastation appears
to be ongoing as there are some signs that the total amount of damage from the
credit crisis may still be "off the books" and the initial crisis has
now started a rippling detrimental affect on other parts of the economy such as
jobs and outstanding foreclosures. Tomorrow morning's release of pending
home sales will provide market participants a chance to maneuver the market in
this epic battle of bulls vs bears.
Stock Market Leaders at or near overbought
levels
April 6, 2008
3:00 p.m.
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
Stock Market Leaders like Solar Power stocks are starting to
show the strain of being "overbought" in the current rally.
Sometimes these rallies end in buying extremes that result in climactic sell
offs, other times the rallies fade quietly, and sometimes they are only pauses
before another rally. For example, in October 2007 JA Solar
Holdings touched it's upper trend line before a climax in buying on heavy volume
sent it to a close above this line in early November 2007. Note the size of the
correction from over 24 to less than 16 in three trading days. The stock
chart has established a similar trend recently, on Friday the stock closed above
it's upper trend line on large volume.
Employment Situation Release Could Bring Volatility
April 3, 2008
8:24 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
Tomorrow morning the employment situation report will be
released. Last month release sent the indices spiraling downward as the
March Report signaled two consecutive months of declining non-farm
payrolls. The consensus on both months was for positive gains.
Many market watchers believed that two consecutive months of declining jobs
signals a serious downturn for the economy. Now the consensus is for a
declining jobs number so a positive jobs number could give the markets a nice
upward surprise.
Is the VIX signaling a reversal in trend?
April 2, 2008
6:46 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
Note the correlation with the Dow and the VIX at the point of
support of the 200 day moving average. Each time the VIX or Volatility
Index has recently approached its 200 day moving average the Index has
reversed. The reversal has also signaled a trend reversal in the upward
trend of the Dow Jones Industrial Average. If recent history continues the
Stock Market will be headed lower.
The 10 day moving average crossed above the 50 day moving
average
April 1, 2008
6:33 p.m. PST
short term indicator: negative medium term indicator:
mixed
long term indicator: negative
A technical bounce today as the 10 day moving average crossed
above the 50 day moving average. It doesn't appear to be a news driven
rally today as it's hard to take a lot of optimism from UBS's $19 Billion
writedown. A lot of traders may have jumped in to a strategy of buying
when the 10 dma crosses above the 50. The last time the 10 dma crossed and stayed above the 50 dma was September 2007
(see blue arrow), it may be too early to tell if today was an April Fools joke
or the 10 dma will sustain a movement above the 50 dma. The next point of
resistance appears to be 12,760 as shown on the horizontal green bar on the
chart below. A few more charts showing this
particular strategy of buying is shown here http://stock-trading-101.com/stock-trading-strategy/
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INVESTMENT. THE EDITOR OFTEN TAKES POSITIONS IN THE MARKET THAT ARE NOT
DISCLOSED. A STATISTICAL ANOMALY OR OCCURRENCE DOES NOT NECESSARILY
IMPLY SOME FUTURE DIRECTION. ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________