A lot of volatility has resulted in very little net movement over the last couple of
weeks. After plenty of swings in volume as well as prices, we're about where we left
off before we got snowed in and took a long President's Day weekend. Worse, there's
still no clear direction for the market (continued below).The resistance at 1345 we
have been keeping our eye on again became a factor after we came crashing down from
Friday's surge. That's why those rallies let in the day and late in the week need to
be taken with a grain of salt, since there's no easy way to get that immediate
follow-through. Like we had mentioned, staying above 1345 would be critical, and we
didn't stay above it
Instead, we gave all of it back by moving as low 1291.96 yesterday. While this was
certainly scary for the bulls, we did manage to reverse course by the end of the day
to actually move higher. However, we have clearly seen that it won't take much to
deflate this market quickly.
That brings us to today, and more importantly, brings the prior two trading days into
a little more balance. It is now we can see that investors are still undecided. The
key 10 and 20 day exponential moving averages (EMAs) have both been crossed three
times in as many days. The resulting interpretation is still one of neutrality.
On a side note, we made a high around 1330 today and yesterday, so topping 1330 may
be a minor hurdle. We also bottomed around 1315 today and Monday, so we'll draw our
line in the sand there, and throw out yesterday's low as a fluke. Check for a close
above or below 1315 today - that will be key. Our expectation for the time being is
continued sideways movement, at least until we firmly move above support and
resistance. Support is at 1315 while resistance is at 1330 and again 1345.
Daily Chart of the Nasdaq Composite (COMPX)
OEX COMMENTARY
While the Nasdaq didn't look particularly good, the S&P 100 looks even worse. Unable
to even threaten the 20 day EMA line, we didn't even stay above the 10 day EMA.
On top of that, we now have enough days to draw support and resistance lines after
last Monday's gap, and the chart is not encouraging to those would-be buyers. If
today's firm move lower results in a low close for this week (under Monday's close of
421.47), that may be all she wrote.
Last week's resistance zone between 430 and 425 may have been understated. While we
fell straight through 425 Monday, we made highs not much higher than that level today
and yesterday. Getting above 425, then, seems to be our first step towards
bullishness.
Even with yesterday's big rally, there's still not enough evidence to suggest that
the bulls have enough conviction to sustain an uptrend (but the bulls are out there).
Our outlook for the OEX is neutral to mildly bearish. Support is now at 415 with
resistance at 425. That support level is based on the lower trendline of the chart.
Daily Chart of the S&P 100 (OEX)
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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