BigTrends.com
Weekly Market Outlook
November 15, 2003
NASDAQ COMMENTARY
If you got whiplash this week, you weren't alone. We started out weak, then
Wednesday's rally looked like it would stop the bleeding, only to close out the week
heading lower (in a major way) again. And yet, some of you may be surprised to hear
us say that the trend is still a bullish one. Despite crossing back under the 20 day
EMA line (blue), we still find ourselves above the bullish support line. In fact,
we're still about forty points above it, so we could fall even further and still
technically still be inside the bullish channel. The point is, it's not quite panic
time yet.
While the two techniques were a bit at odd with each other when it came to Intel
shares, both the Chaikin line and the accumulation-distribution line are in agreement
on the Nasdaq chart; they're both saying that the overall volume trend is in favor of
the buyers. You'll recall that the Chaikin 'buy' signal is a cross above the zero
line, which we actually saw on our charts Friday. The accumulation-distribution line
is simpler to use, in that the direction the line is pointed indicates whether the
trend is a buying trend (accumulation), or a selling trend (distribution). As you can
see in the lower portion of our chart, the longer-term accumulation-distribution line
is rising.
Between the Chaikin line, the accumulation-distribution, and the fact that the index
is still inside bullish trend line, we have to remain bullish on the Nasdaq
Composite. That's tough to after a day like Friday, but that's the reason we use
technical analysis - to avoid the emotional influence on our market outlook.
NASDAQ CHART
S&P 500 COMMENTARY
We'll stick with the weekly S&P 500 chart today to again point out that the bigger
trend remains bullish. In fact, even with this week's drop, we still haven't fallen
back to the 9 bar (two month) moving average line (red). So like the Nasdaq, we could
still fall a bit farther and technically remain in a bullish trend. You may also want
to be aware of something that got lost in the shuffle in the midst of Friday's
sell-off. Look at the high for last week - the S&P 500 actually made a new 52 week
intra-day high of 1063.65 on Friday. We didn't remain at those highs (obviously), but
we rarely do the first time around. Breaking into new chart territory never comes
easy, but now that we've chipped away at that resistance, it will be easier to get
back to that level again.
As for technical indicators, most are still at least somewhat bullish. It's difficult
to tell on the MACD chart, but both lines are slightly rising now - barely. The
stochastic lines are a bit easier to decipher, as both are high and going higher. As
long as the stochastic line are above 80 and/or rising, we're interpreting it as a
sign of the overall strength of the market. As you can see going back to May, very
high stochastic readings (technically, 'overbought' readings) signaled a very strong,
long-lasting rally. Now that we've crossed back above 80, we may be gearing up for
another leg higher.
This is tough to hear (and say) after a losing week, but the signals are the signals.
We'll remain bullish until we cross back under the 9 week moving average line, or
until stochastic lines fall back under 80.
S&P 500 CHART
BOTTOM LINE
The economic announcements are staggered throughout all next week, so look for a
little prodding every day. Don't forget that this coming Friday is option expiration
day, which is capable of wreaking havoc, bit more often than not results in a very
mild, balanced day. In fact, this settling usually begins in the middle of the week.
And again, we'll remind you that despite the losing weak, the trend is still bullish.
We'd never guarantee things will stay that way, but the technical indicators and the
overall momentum still say that we're in an uptrend.
Have a great trading week ahead.
Price Headley, CFA, CMT, President
With James Brumley, Research Analyst
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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