3SOF

Quote from: nullzero on January 12, 2007, 05:22:26 PM
The conditions today compared to the late 1990s are drastically different (the economy was on its way up.) Fundamentally I would  be very worried buying into the higher PE tech stocks. Watch out for profit taking soon, the NAZ has over rallied in my opinion. The QQQQ has gained over 25% in a 6 month span. Even with the GDP lowering, housing market the worst it has been for over 10 years, and the US dollar still weak.... the market is still rallying. I think we are going to have a wake up call very soon.

You know...I have given up fundamentally thinking about the state of the economy and the market's reaction.   That's why I like looking at techincals of the stock market.  Avoids the noise of doom and gloom.

Every year we are more and more a part of a global economy and even though I agree with the Economic problems in the United States...growth elsewhere may take the lead.  Once again...I don't want to think too much about it...all I see is a break of the two year channel...which in my mind says we are setting up for a new steeper trend.  I know a one day break is not a year make but  before today I was ready to sell just about everything because I felt we were at the top of the channel.  David in the Members corner has a good analysis.

Best of luck

Weeklend Ramblings: I'm betting for more upside

The biggest development this week was that the Nasdaq, which had been stuck in a trading range between 2470 and 2390 for several weeks, finally broke out of it to the upside. For the Bullish crowd this is a positive development.

If the SOX can break out of its Triangle pattern to the upside and rise above its 61.8% Retracement Level just above 490 then this should allow the Nasdaq to follow through to the upside in the weeks ahead.

If the VIX drops back to below the 10 level next week or the week after this could signal a nearing top. The last time the VIX dropped below 10 was back in mid December which led to a minor correction in the S&P 500.

Finally even if we do see a correction develop at some point in the early part of 2007 keep in mind the longer term trend is still upward as the S&P 500 has been making a series of higher highs and higher lows since 2004.

Good trading to all. 

I'm also betting for more upside, the nasdaq is making a bounce very strong...

--->Nasdaq PPS is also bounced off from 50sma daily chart, very strong move...take a look at the second chart below.

----> The 9sma in the weekly chart is just below at nasdaq price providing support & looks ready for another upside rally.

Market not good, I think it is time for pullback..

Quote from: Terliso on February 12, 2007, 04:19:01 PM
Market not good, I think it is time for pullback..

Terliso,  been thinking the same thing myself.

Getting a little nervous re the whole market, finding it hard to go long in general as I feel we need a pullback.  Haven't had any long term back and fill action in about a year.  We are also heading into that sell in spring (May) scenario which just about fits the time frame and many of the indicators on the charts.  However nothing has really failed yet, just looking a little extended and starting to round over on many indicators.

Simple chart below showing the index majors on the weekly.  Although some individual stocks can do this sort of thing for very very extended periods I don't think all the majors can do it.

I feel the pressure building, irrational exuberance, the longer it goes the larger and faster the pullback / correction.

JMHO, subject to change without notice

Quasi

Yeah, been wondering this too.  I started a thread in the members corner last Friday to discuss whether a correction/pullback is about to start.  There is some good debate going on there.

My take is that today was not as strong as it looks.  Volume was weak, and the $NDX is still under its 50sma.  The Dow and S&P are strong right now, but I think the Nasdaq would lead the correction.  The very fact that today was up on low volume sets up the possibility for another distribution day this week.  That would make 4 in 4 weeks for those of you that follow IBD and Bill O'Niel.

Quote from: Terliso on February 12, 2007, 04:19:01 PM
Market not good, I think it is time for pullback..

Oh my, my! here we comes!
---Dow Jones broke the 50sma today for the first time since August,
and Nasdaq is breaking again the 50sma. Though, both volume are weak.
---Now, MACD bearish cross in the weekly chart, that is something to watch for.

Goodluck guys, if you are still long in the market.

Hi all, interesting discussion.

I've also been playing around with some index charts since last fall. Just trying to spot when things are getting alittle ahead of themselves and ready for a pullback. I almost bought some QID's a week ago but was a little weak on the trigger finger. Didn't really expect it to start like it did on Tuesday, but it's started now. I did buy some QID's today as the gap on the Nas filled, didn't think it would go much higher today.

In case you are not familiar with the QID, it is one of a family of ETF funds by Proshares. They trade like stocks and have a very small management expense. In the case of the QID it is a leveraged short fund of the Nasdaq QQQQ's, so when the Naz goes down it goes up and as its leveraged it will go up faster than the QQQQ goes down. Sounds great but be careful it will also go down quicker. They also have an unleveraged version called the PSQ. http://www.proshares.com/

I was in the bull camp up until last fall when I became a nervous bull and started to pull back to about 50% cash. Today I'm quickly converting to Bear mode, not fully there yet, waiting for the dust to settle and creating my short list just so it's ready. That was some kind of major action on Tuesday, really showed what kind of strength this house of cards has, NOT MUCH. I've been reducing my long side speculative positions on the rallies the last couple of days. Still holding my O&G and metals as I'm still bullish on those sectors, but only in selective stocks.

I got a real laugh today as on CNBC Maria B. announced, "the correction is over, glad it happened quickly and we are returning to full bull mode". YA RIGHT. Don't watch the talking heads much as I don't like how they change their position daily by analyzing data from the last few hours and extrapolate it into what will happen over the next year or so.

In my opinion we haven't even started the shake out yet and have a long ways to go before a new base can be made to take another run at the highs. But with the huge chart damage that has been done this will take a while, lots of ups and downs, on the way down. I started investing in Dec/Jan 99/2000, so I got my training by fire quickly. Same stories as today, stocks are worth the valuations, today is the new bottom, can't go any lower etc etc. Well I owned all the high flying tech's and Enrons and Worldcoms etc, bought and sold and bought and sold most of the way down. So I lost some but no where near as much as the buy and hold guys who kept averaging down. It was a very good learning experience, my best luck was I held over 50% in O&G during that time which balanced out a little more than half my losses.

Find below a couple of my updated charts on the index action for the Naz and the S&P.  Sorry you will have to scroll them (or click and open in separate window), as they were made for a different board.  I wish Ramsburg would allow the site to operate in percent width rather the current fixed width at 600, which means max chart is 520.


happy trading / investing
Quasi

Charts COMPQ/INDU/SPX
Wait & See...

http://financialconsulting.blogspot.com/2006/11/continua-la-euforia.html
http://financialconsulting.blogspot.com/2006/11/compq-nasdaq-composite.html
http://financialconsulting.blogspot.com/2006/11/s-500-index-spx.html

I'm hearing a lot of talking heads announcing the correction is complete, all is well and great buying opportunity.  With these guys I'm a bit contrarian as they always tell you to buy at the top and sell at the bottom.  Don't really pay much attention as they are always analyzing what happened in the last 24 hrs and extrapolating it to what will happen over the next year.  Ever notice how their long term predictions swing rather wildly all over the place.

Anyway I basically started leaning into the Bear camp last fall and now expect to be there for several months. 

For the Nas I don't think we will see any bounces above the close of that first weekly low, at least based on how the last few corrections have played out.  In the past they have pretty well just worked down to the lower trend line without any significant rallies.  I think we will get there in the next couple of months, then will it hold, not really sure at this point.

For the S&P things have been a little different in recent corrections, there have been a few rallies.  Probably the flight to quality out of tech sort of thing, but eventually it too also reaches the lower trend line.

So time will tell, this is all JMHO and subject to change without notice.  Sorry for the wide charts I made them for another site that supports them.

Quasi

Mentioned a few things over on the 3SOF fire market open board today.  Another little bounce, just like the last few days without much follow thru.  But I'm expecting this sort of action and could retrace a bit more before we have a confirmation of trend or I think more likely we will get a confirmation that the correction is to be more major or actually become more like a bear.

The full post is here, but I'll put a summary of the charts I didn't have time to post earlier, here for convenience.

http://www.3stocksonfire.org/trading/index.php?topic=9117.msg91753#msg91753

When I look at the major index's there was a critical event which caused major technical damage to the charts. (daily and weekly charts).  This will take some time to correct, we all expected a retrace after last Tuesday and that is whats happening, like you said "line in the sand" is the mid point of the first big red candle.  Well the last couple of days we stalled at the FIB  23.6% level, today the high so far is stalling right around the  38.2% level.  In order to just get up to the mid point of the big red candle we will need to get into the 50% to 62.8% retrace range.  There is a lot of overhead resistance and I think huge resistance to set new highs on the major index's  for quite some time.  For me last Tuesday really showed how fragile this house of cards really is, at this point.

Sorry the charts are a little large, they were done for another board, might be easier to pull em up in a separate window than scroll.

Anybody got other ideas?

JMHO
Quasi

Hey Quasi,

I've been having a look at charts for a lot of the market indices (Dow, Compx, QQQQ etc) and also for many stocks as well and what I keep seeing are rallies back to resistance over the past week after bottomig on Monday.  Friday looked to me to be a breakdown day, and intraday charts on most of these indices showed a breakdown of a week long rising wedge.  Obviously we are at a key turning point right now.  Either the market rallies above this resistance, and I suppose we could see a bit of knocking on the head of it, or it sells off below the previous week's lows and we enter into a general market decline.  I could easily see the NAZ losing 200 points or more over the next few months as this move plays out.

Anyway, sorry the charts look a bit rubbish, Stockcharts is down.  But I think it is relly important that we keep abreast of this situation, as we are all going to be affected by it in our trades

target  3100 points 

Nasdaq technology has been my focus for a long time...they need to step up and lead the markets...internals suggest weak breakout on Nasdaq.
We have been sideways since May...we could go sideways until October as the market consolidates waiting for 3rd quarter confirmation.
Yesterday was too fast, and the market needs to digest some of this move and let the internals catch up some more.


Technicals
Record Price High

Last Price Quote is:
2.05%above 13-day MA
4.28%above 50-day MA

NASDAQ COMPOSITE (Nasdaq:^IXIC)   

Index Value: 2,707.00
Trade Time: 5:16PM ET
Change:  5.27 (0.20%)
Prev Close: 2,701.73
Open: 2,696.96
Day's Range: 2694.09 - 2707.64
52wk Range: 2,147.44 - 2,707.64

The major indices are breaking the downtrend they've been in since mid-July.  Let's see if this can keep up.