We got more of the same for the Nasdaq Composite last week. Most of the major
resistance points had been previously crossed the week before; this week simply
confirmed the move.
What did happen that was tremendously bullish was the crossover of the 200 day moving
average line with the 10 and 20 day exponential moving averages. This had only
happened once since the downturn started in 2000, and serves as a testament of market
strength. It?s likely that we?ll still see continued volatility in the near and
intermediate-terms, but the long-standing barrier has been toppled.
It?s also encouraging that we?re seeing these big days made on high and rising
volume. It?s still not clear yet if it?s institutional or individual buying. Both are
fine by us, since it indicates that people are coming off of the sidelines.
Ironically, it is the rising market that attracts people to buy, yet is that very
buying that further spurs the market to rise. The point is, keep an eye on volume. If
it starts to significantly taper, we may see weakness again.
All the same, our intermediate outlook is mildly bullish based on current charts.
Don?t misunderstand; we still have the same concerns from last week about a major
fall for this flimsy market. But each day that passes that doesn?t hurt us solidifies
the bullishness. If we haven?t taken a major hit by the end of next, we?ll have
survived most of the dangerous pivot.
Resistance is now at 1465. Support is at 1370 and again at 1350.
Daily Chart of the Nasdaq Composite (COMPX)
S&P 100 (OEX) Commentary
The S&P 100 is the more interesting of our two indices for last week. It crossed its
important 200 day moving average as of Friday. The last time it did so was about this
time last year (and even then it barely did so), so this is a meaningful signal.
This does force us to accept that this rally may be stronger than earlier suspected.
The real test will be next week to see if the index can STAY above the 200 day line,
but at its current rate, that certainly seems likely.
Like the Nasdaq, our expectation for the OEX is continued volatility (both bullish
and bearish), but we are seeing a distant light at the end of the tunnel. Our bias is
mild bullishness, but heed the same warning from the Nasdag commentary ? we are still
in dangerous waters.
The ceiling for the OEX at this point is 475, where we topped out in January (Yes,
that?s quite a bit away from today closing at 456.37). Support is at the 10 and 20
day EMA lines, or 436 and 430, respectively.
Daily Chart of the S&P 100 (OEX)
The Bottom Line
Whether this rally makes sense or not is irrelevant. It?s happening. Most of the
rally seems to be stemming from the war effort in Iraq, which isn?t completely
unmerited - freeing up oil will drive oil costs down, which in turn will broadly
lower domestic costs. As investors we?d rather see revenues and P/E?s rise before
stocks do, but it seems that the markets are looking to buy preemptively (stocks can
and often do recover prior to an actual economic recovery). In any case, this is
potentially a big boost to the economy; just don?t be disappointed if the effect is
not immediate. Although mildly optimistic, we?re still advising caution, both long
and short term.
Have a Great Trading 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!
#forex4u - chat forex MIRC
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
