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.