BigTrends.com
Weekly Market Outlook
September 6, 2003
We knew in the last Weekly Market Outlook that the bullish momentum was good for a
few more days, and on Friday we found out just how many days that would be. Tuesday
through Thursday were pretty strong, but Friday ended up giving us a pretty strong
reversal. The question now is one of whether or not that bearishness will
carry-through to the coming week.
NASDAQ COMMENTARY
Quite frankly, despite Friday's turnaround on relatively high volume, the overal
trend is still a bullish one. The Nasdaq managed to make a higher high and higher
low, and we closed out the week with a 2.75% gain. And that was only a four day week!
One of the key elements of our recent analysis has been volume, or more specifically,
a lack of volume. Most of the reason that market didn't do much of anything this
summer stemmed from the fact that there were very few buyers or sellers (no demand =
no change). But over the last four days we've seen a general increase in volume
levels. While this does not specifically mean bullish or bearish things, it's
exciting that we'll at least be able to start some trends that follow through. So
far, the volume trend has been equally bearish and bullish, but over the next several
days we'll start to see one side of the volume trend overpower the other. At that
time, we'll again plot our Chaikin line to see which way the majority of investors
are headed.
Until then, the general trend remains bullish. The Nasdaq Composite is still well
above the 10 day EMA (red) and 20 day EMA (blue) lines. Until we break under those
lines, we're not going to bail out. We're also keeping an eye on the overall support
line (dashed) that has been in place since March. That line is currently at 1812, and
has become a monumentally important guide.
NASDAQ COMPOSITE CHART
S&P 500 COMMENTARY
While the Nasdaq's decline on Friday was concerning, the S&P's drop on Friday was
downright worrisome. We did not make a higher high, yet we did make a lower low. But
the high for the day was the real trouble spot. We've topped out at 1029 the last
three days, so for some reason, investors have drawn a line in the sand there. That's
going to be our first resistance level.
However, while we have strong resistance just above us, we did break out of our
trading range over the last three months. The top end of our range was at 1015, and
we closed above there for the week. In fact, we never even closed under 1015 for all
four sessions this week. As long as we can stay above that line, we're generally
bullish.
Like the Nasdaq, the S&P 500 is still well above the 10 day EMA and 20 day EMA. So, a
pullback to those levels still wouldn't be a major cause for alarm. In fact, it may
be just the thing we need to cool off an overbought market. With the stochastic lines
well above 80, a lot of folks are getting an itch to take profits while stocks are
overbought - before they fall again. For those who are looking to hold onto stocks,
the ideal situation would be for the market to 'walk off' the overbought situation.
This just means that if we can hold at these current levels, the stochastic lines
will dwindle under 80 but stocks will not lose ground. Additionally, if stocks do
flatline for a few days, that would help establish a support base around 1015.
However, just because that's the 'ideal' for you bulls doesn't mean it will happen.
Still, we're bullish until we actually close under the 10 day EMA line, currently at
1004 and 1012.
S&P 500 CHART
BOTTOM LINE
Don't let Friday be the only thing you remember about last week. The trend is still
technically bullish despite one bad day. Look for closes under the 10 day EMA lines
for early exit warnings. On the flip side, the S&P's resistance at 1029 is a big
deal. If we don't manage to get above there in the next few days, that may be ahint
that the really has really run out of steam. This wouldn't be a complete shock, as
September is historically problematic for stocks anyway.
Have a Great Tading Week Ahead!
Price Headley, CFA, 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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