With the onset of war, the last two weeks have been a wild ride. Both the bulls and
the bears have been right at some point, but neither has been right for very long.
It?s seems that the market is creeping along at this point, as investors are all
?waiting to see?. We are too.
NASDAQ COMMENTARY
Our outlook from last week hasn?t changed. We?re still mildly bullish, despite
Monday?s pullback and the choppiness since then.
Why is that? For starters, the Nasdaq Composite is still hovering above its 200 day
moving average (not shown on our chart). The 200 day line is currently at 1344, so
we could suffer even a little more downside before sounding the alarm. More than
that, the composite is still trading well above the critical 10 day and 20 day
exponential moving averages.
Yes, the last three days are cause for concern, but the pullback wasn?t a surprise.
We were WAY overbought after the big surges, and the war picture got a little less
attractive last weekend. These pullbacks are a natural part of uptrends, and can
actually serve to confirm the strength of a trend
While the pullback isn?t a major concern, we do want to keep an eye on the
accumulation distribution line. It?s currently falling, suggesting that investors put
the brakes on buying. Maybe they don?t have the same bullishness that had when
markets were exploding to the upside.
The composite is now tightening its range as it establishes new short term base
levels.
Resistance for the composite is right at 1400, where we topped twice last week, and
haven?t gotten above this week. Support is at 1375 and again at 1360, reflective of
the 10 and 20 day EMAs.
Daily Chart of the Nasdaq Composite (COMPX)
OEX COMMENTARY
The S&P 100 chart doesn?t look as good as the Nasdaq Composite. In this weekend?s
edition of the Weekly Market Outlook we had noticed that the OEX crossed over the
important 200 day moving average. After the situation in Iraq worsened, though, we
fell back under it during Monday?s session. We haven?t been able to get above it
since then.
This is no small matter. The 200 day line is the mother of all indicators, and
crossing it (or failing to cross it) is a consistent indication of which way markets
are headed. The situation is worsened by the stochastic chart, which is currently
saying that last week?s lift put us into overbought territory, thus making a downturn
likely. The cross of the stochastic line under the 80 threshold is a sell signal for
many traders. Although it is possible to stay overbought during long rallies, we
think investors are a little too nervous to ride out losses for long.
The movement over the last couple of days and today could be considered ?settling?
into new short-term trading ranges, and our expectation is that we will go higher
after the war effort is fully digested. Until then, it seems as if investors are
taking a ?wait and see? approach due to the military conflict. That?s not a bad
choice.
Until we break back under the 10 and 20 day exponential moving averages, we?re
sticking with our mildly bullish outlook.
Resistance for the S&P 100 is right at 450, where the 200 day line is resting. We?ll
put support at 440 and again at 430 to reflect the 10 and 20 day EMAs that have been
key indications in the last few months.
Daily Chart of the S&P 100 (OEX)
Bottom Line:
It?s been tough to stay bullish to any degree with the daily changes we see in the
Iraqi situation. Bad news just gets worse, yet it seems that markets are handling it
well. Not being spooked out yet, it looks as if investors are getting into the market
for the long haul. You can expect the choppiness to continue, so the ?wait and see?
idea has merit. But as of right now, the outlook is mildly (yet cautiously) bullish.
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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