December 19, 2007 - Market Recap

Todays focus is only going to be on the Nasdaq composite index. The 8 day moving average is below the 21 day moving average which is below the 55 day moving average. This shows that a general downtrend is occurring. Until that switches the long term, medium and short term trends are all down. The daily price is also below all of the moving averages.

The volume also did not increase much today. There is no steam for the bulls to raise prices upward. There was also very little price change. The stochastics are also included for completeness. Even though we got the oversold cross saying it is time to head higher, the other indicators disagree with it.

The 5 day moving averages of the open and close have not crossed over yet. We may see that cross but I will be skeptical unless we get the signal as well in the SVAPO. It is getting close to where a signal in SVAPO should occur, but the volume will have to pick up as well. Still believe this is a slight upturn during expiration week and will turn on a dime and go back down early next week.

December 17. 2007 - Market Recap

Wanted to focus on the S&P 500 and the Nasdaq today. Notice how the December 4th low was broken today the only thing stopping this from continuing down is the low the last week in November. Since this is options week we will see if some pinning starts to occur. The SVAPO is heading back to oversold, and then we should see a trun in the MA(Open) and the MA(Close) switch positions and start back up. At that point it may be appropriate to initiate some trades. This chart with the Nasdaq is interesting because we are getting close to the Novemver low and the next resistance will be the August low, which I put at 2460 if you look at a longer based trendline. The other item to note is that presently for this down trend we are not seeing the volume that we had in the past. I added a 50 day moving average on the volume graph. Notice the other drops had large volume. We are not experiencing that so far so this may be the last downtrend for awhile. People may be looking at there portfolios and worried about the tax implication. We may have to wait till January for a continued down trend.

The next graph is the % of stocks on the Nasdaq above their 50 day moving average. Notice it is not quite as low now as what it was in September but we are getting close. The item of more interest is the % of stocks on the Nasdaq above their 200 day moving average. The bears have been in control for a while, and I expect them to stay there for a while. Once the 200 day broadens then will be a good entrance criteria for going long.

December 12, 2007 - Market Recap

Only going to show two charts today. The first if of the S&P 500 and some of the technical indicators. The upper chart shows the trendline. Notice how there is a faster trendline down and then a pull back up to the slower trendline. The SVAPO turned the day before the Fed Announcement, with a sell signal. Notice how today the 5 day MA of the Open and the 5 day MA of the close crossed to say that we are in another down trend. The OBV has also been very flat. There was a alot of fluctuation. Stocks opened up much higher but the Bears dominated the Bulls after the early rally.

The second chart shows a classical Elliot Wave on its last leg going down. I labeled the 4 legs going down. If you look closely you can see 5 waves going down on C and 3 waves going up on D. This would imply that there should be 5 more segments going down to form the E Wave. This would take us to 690 to 730. That is where the Russell 2000 should go.

December 7, 2007 - Market Recap

The DJIA has retrace to 5/8 of what it went down. The problem is that it looks like it has 3 wave going back up. This would mean that the next drop could take place. With the light volume and the open and close being about the same, it should start to go down.Notice how the S&P 500 has pulled up to the down trend line. I would anticipate it turning back down. This is what was predicted in an earlier post.
The Russell 2000 also is showing the same thing. It should turn again tomorrow 12/10 and go back down.

HD Review

Wanted to show a couple of graphs of Home Depot. The first is the trend lines. I am expecting it to go to at least 32 before it either breaks up or turns back down.Also notice the OBV it has flattened out and is looking like it will turn. It shows that there is a divergence between price and OBV. It should be making a turn now.

December 6, 2007 - Market Recap

The DJIA rallied today and although the volume was not as strong as it should have been for an uptrend to occur. The OBV did not break out. The S&P did not break above its down trend line yet. It also did not go back to the 38% retracement. It could still turn tomorrow depending on the employment report.
As the chart shows the volume was not real high for the Nasdaq either. It did cross over the 55 Moving average line. It will be interesting to see if it stays above the line.
The Russell did not break the trendline either. But it is back in the congestion zone between 780 and 800. It has been there before for several periods.

December 3, 2007 - Market Recap

The DJIA turned back down a little bit. On Friday it bounced off of the longer term trendline. This should consolidate up against the higher trendline before turning down for 13 days, and going well below the 12,800 level. The Stochastics are all over bought and showing a turn. It was light volume, people are waiting for the Fed anouncement on interest rates.
Very similar picture on the S&P 500.
Very similar with the Nasdaq. Once again it bounced off of the longer term down trendline.

Finally the Russell 2000 bounced off of the fibonacci levels. Expect it to go to 710 before it turns.

November 2007 - Monthly Recap

Shown is the weekly graph of the DJIA. The blue line is the 13 week moving average. It will provide resistance for the trend going up. It appears to be a double top and the weekly chart should turn and go backdown around 13,600. If it does turn expect it to continue down.
The S&P 500 shows very similar results. Anticipate it going to 1500 and then turn. The stochastics are both showing oversold and should be purchased now. Once again the 13 week moving average is fairly flat.
The Nasdaq may consolidate for a while but then trace out a head and shoulders pattern and go back down . The shoulder will be at a little above 2700 and then will make a sharp turn back down.
The last one is the Russell 2000. Expect the price to be slightly above 780 before it turns down again. I will be watching for the change to start selling short.

In general we are in a downtrend and should be treated as such.

November 28, 2007 - Market Recap

The DJIA had a very good day. The downtrend that we are in looks like a classic Elliot Wave. We are starting into a slight upturn in a bear market. It appears that it may go to 13,500 and then turn back down. This should occur by the end of next week. The downtrend will resume and go below 12,500. The five waves can easily be seen during the third wave down. We are now in the 4th wave up. which should be very similar to the uptrend the end of October with 8 days up. We have now had 3 days up so another week and it should turn again and have a significant down turn.
The S&P will hit resistance at 1,500 and will turn back down. Notice the first wave down hit support at 1,500. That has now turned into resistance and the first wave will not be broken at this point before another turn down. There will probably be some consolidation for a couple of days and then up to 1,500 and then back down significantly.

The Nasdaq is not a clear cut as the DJIA or the S&P. It did a double top and then turned down. Would expect it to go to 2,700 and hit resistance and then turn down again.


The Russell will hit significant resistance at 780 and then turn back down. That will be about a 50% retracement. Notice how the Stochastics are hitting lower highs each time but not a lower low. Shows that the bears are winning.

Be prepared for a major downturn in a week. All indicators are that cash is flowing out of the market.

November 26, 2007 Market Recap

Once again, I have not been posting like I should. This shows I am not paying as much attention to the market as I should and I have been losing mone because of it. So I will try to start posting on a regular basis again.

The DJIA is in a downward channel. Five waves from Elliot Wave theory can be seen on the chart since the 14,200 high in October. I am anticipating over the next few days for the DJIA to hit 12,500 and then moving back up to 13,400 and then going down again to 11,800. Since January typically has a good run up, the 800 points will probably occur by the middle of January. Notice how the OBV is below the August low point so expect this to go lower going above the 14,200 mark. I have also included the SVAPO. This is a new indicator described in the November issue of Technical Analysis of Stocks and Commodities magazine. You can actually see the buys and sells getting lower and lower. Showing that we are in a long term down trend. It appears it could be a useful indicator.

The S&P 500 index is much the same as the DJIA. In a trading channel going lower. It should go to 1,360 and then bounce to 1,460 to 1,480 and then lower again down to 1,280. It may turn upward at that point. Also notice the SVAPO and OBV.


The Nasdaq is not in as sharp of a trading channel as the others. I need to look at why the SVAPO looks like it does. Still probably going down lower.


This chart of the Russell 2000 is interesting. It closed below the August low. It may go down even more. Since the Russell 2000 does not have volume associated with it, It appears to continue to go down. Note the Green Line that cuts across the graph and exits about at 800 on the right hand side is a long term trend line channel that started in 2004. I have been watching it carefully since we started to break it in August. And now are 12% below the trend. The uptrend has been broken and now we should be looking to go short.



The one other point to note is the % of Nasdaq stocks above their 50 day, 150 day and 200 day moving average. They are all below the 30%, This is usually a good sign for an upturn in the next 40 days. Look for a break in the channels and then get long till mid January.

July 31, 2007 Market Recap

I have not posted for over a week. Just being busy with work. I have been watching the markets every night though. Last week had high volume and down days. The pull back has been almost to the 50% since the March low. I would expect the Dow to drop about another 200 points before we start coming out of this down trend. If it continues drop it could go down to 12750 before it hits support. The Stochs are very oversold, I would expect a change in direction here shortly.


The same thing holds true for the S&P except it hit its 50% retracement on Monday and has made a bounce upward. The Stochs actually crossed today, so it may be a good time to buy. After so many days of being down, I am looking for a bounce back up and hitting the 50% retracement yesterday, it could be up for a bounce this week.


The Nasdaq also broke its channel. It had a very large range day today, but opened up and closed down. Very high volatility. It is about ready to hit the 50% retracement. The Stochs are once again very oversold. It should be getting ready to turn.

The Russell 2000 is the market I am going to focus more on today. We have just about totally retraced to the March lows. This will definately hit support at 760. I am anticipating that we will hit support before that. If you look at the channel that we have been in since 2004, it should pull back up to the center of that channel. I did a daily gain on the channel and it came to a gain of 14.5% / year. If I follow that through the channel has a position of 774 presently. I am expecting a bounce off of that value. That value is also close to the 377 day moving average, that if you look back over time the market bounces off of it. I picked 377 because of the long time frame of this channel and that 377 is a Fibonaci number as well. If it breaks below this channel significantly, we will no longer be in a very long term up trend. The Stocks are not oversold on the weekly time scale, but are on their way there. The dips in 2004 and 2005 were actually more oversold than present, but the Russell 2000 stayed in the channel. I would expect a bump up tomorrow.

July 18, 2007 Market Recap

Today the focus will be volume. Notice how OBV has flattened out. The down days are higher volume than the up days. Today had down day, and higher volume than average. The Moving averages on the OBV and the Volume chart shows what the average has been for the last 21 days. It gives a good estimate of the direction of the Stock market and if it is going to make higher highs. Although the OBV is above the moving average, the OBV really hasn't changed much in the past 2 months. The high is not supported by volume.

The same can be said about the S&P 500, a new high but the OBV did not really hit a new high. The down days seem to be above the moving average for volume and the up days are below the moving average.


The Nasdaq may be one that is not quite like that so it will be interesting to watch it for a while. It OBV has flattened out as well. Volume did not support the higher prices.

July 17, 2005 Market Recap

The DJIA made a new high again today, but could not stay above 14,000. The stochs are in the overbought zone again. Tomorrow could possibly be a down day. The gains the Dow has made the past few days it is time for a pullback. The S&P is having a hard time getting past the 1550 mark as well. The stochs are also in the overbought zone, and once again I would expect some pullbacks as people take profits.

The Nasdaq continues to hit new highs. The gaining of 5% in the past 5 days is a very rapid rate of gain. I would expect a pullback on the Nasdaq as well.



The Russell 2000 is still stuck in the trading range between 820 and 855 but the short term trend has been up. The lows have been higher, although new highs are not being reached yet. It appears we are in a channel, but has not broken out.

I mentioned I would look at the mid term trend. It is following the long term trend right now. There are no differences. I will look at the short term trends in the next couple of days.

July 16, 2007 Market Recap

With the latest push upwards, I redrew the trendlines from the March low and just touching the lows that have been set. This shows the major uptrends. The way I determine if the market is in an uptrend or in a downtrend is by a 3 Exponential Moving Average cross. For the major trends, the 3 time periods are 8, 21, and 55. I like these because of the correspondence to 1 month on the 21 day moving average. I will explain more about that in a different post. When the 8 day EMA is below the 21 day EMA which is below the 55 day EMA then the trend has changed to a down trend. Similarly when the 8 day EMA is above the 21 day EMA which is above the 55 day EMA then it is in a uptrend. I realize that the uptrend and downtrend come a little late that is why I will use 3 different time frames. Tomorrow I will show the mid term time frame. The DJIA could not break the 14,000 mark. It looks like this week could be a turning point for the market with it be expiration week.

Very similar with the S&P. It actually close lower today. Tomorrow will be a telling day.

The Nasdaq, I put in parallel lines to show the trendlines. Notice that it is not close to the line if you do the parallel lines. This may not be as close as it should be, but shows that it is not gaining as fast as it did originally in the trend.

The Russell 2000 has not really made a new high. With the loss today, it will be interesting to see if it can cross 855 or if it is headed back down to 820 where it should hit significant resistance. I also closed my short postion on the 870/880 July vertical call. Now I will be watching my Iron Condor that is set for August. I am just now learning how to deal with the Options risks. I did ok this on the July Iron Condor that I purchased the end of May.

July 13, 2007 Market Recap

The DJIA reached a new high, but the way the it hit resistance at 12,000 as well as support, and nothing at 13,000, I will be surprised if it blows by 14,000 as well, especially when you look at what the indexes are doing. As earnings come in we will see it the highs can be maintained.
The S&P 500 has a very similar situation.

The Nasdaq is at the top of its channel. We will see if it can stay there or if it will just drift higher of back to the middle.

The Russell 2000 is trying to make new highs. Monday will be a day to see if it will.