BigTrends.com
Mid-Week Update
June 18, 2003
NASDAQ COMMENTARY
The support the index is getting at the 10 day exponential moving average (EMA) is
still the big story here. We found support there last Friday and Monday, and really
haven't even bothered to test it this since then. As we have said, the 10 day EMA has
been important support over the last two months, and we expect that to be the case in
the near future. But even a close under the 10 day EMA should not necessarily be a
sell signal - only an early warning
In our last update we had mentioned our concern about a negative momentum divergence
on the MACD chart, since this would be a sign that the bull trend was weakening.
Fortunately, we were able to dodge that bullet. In fact, the MACD charts have
actually shown a very minor re-emergence of momentum. Like the 10 day EMA, a bearish
MACD crossover wouldn't be a primary signal even if it did occur. However, we'll
continue to watch the MACD lines, since the trend has been showing signs of fatigue
the last few sessions.
We'll again highlight the accumulation-distribution line only to point out the buying
trend hasn't changed: investors were net buyers last week, and they are this week
too. We'll allow the accumulation-distribution some leeway within our support and
resistance channel plotted on the lower portion of the chart, but with any confirmed
break under the support line, we'll rethink our bullish stance.
Support is at 1642, and intermediate-term support is at 1555. Resistance is at 1684,
where we hit a high two Friday's ago that we haven't been able to reclaim since
(although we are near there at the time of this writing). Another resistance point
lies at 1725, but that's hardly an issue yet.
Daily Chart of the Nasdaq Composite (COMPX)
DOW INDUSTRIAL AVERAGE COMMENTARY
The Dow looks just as strong as the Nasdaq Composite, finding support at the 10 day
EMA line when it bothers to even test it. In fact the Dow chart is even more bullish
than the Nasdaq's in some respects. In what ways? Mainly, the Dow has surpassed the
high of 9215.88 created by the big surge two Friday's ago (6/6/03), whereas the
Nasdaq is still struggling to get past that high from the same day.
But it's not just getting past previous highs that has the Dow looking so bullish -
it's momentum too. We had mentioned that the Nasdaq's MACD lines were hinting at a
loss of momentum. However, the Industrial Average MACD chart gave no such hint. With
the Dow's MACD lines still diverging, we can see that the Dow's rally is actually
gaining momentum.
We're also plotting a stochastics chart today, but not to tell you that the market is
overbought (you already know it's overbought). What is most interesting about the
stochastic lines is their persistence to get and stay above the 80 'overbought'
threshold. Folks, that's simply a sign that investors are pushing stocks higher.
Normally we'd be concerned that we're due for a correction when above 80, but when
the trend is this strong, our stochastic interpretation becomes continuation-oriented
rather than reversal-oriented. In other words, the bull trend is still a strong one.
Support is at 9163. Resistance is at 9352 and again at 9395.
Daily Chart of the Dow Industrial Average
Bottom Line: Don't forget that this coming Friday is option expiration day. This
particular expiration is 'triple-witching' day too, so volatility should be no
surprise. If we do get some major moves, don't read too much into it unless we get
some follow-through this coming Monday. Till then, our expectation is continued
bullishness.
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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