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Patterson Relative Strength,
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Written by Jim Patterson
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Tuesday, 08 May 2007 |
Here is the Deal:
Weakness in overnight trading set a negative
tone at the open but the selling only lasted about an hour with
prices bottoming around 10:30 AM. Most indices tested
reasonable near-term support levels and by lunch time it was
clear the selling was modest with no follow through. With that
many indices recovered all their early losses and then some the
day before the FOMC meeting. While the Dow recovered all of its
losses, it failed to set a new record of up 25 of the past 28
trading days, by 3.9 points.
The Dow tested the 13,250 support level on the
open and it held. The main distinction here is the Dow dropped
lower as opposed to trading down through support. With the
negative open, the first hour became a waiting game to see if
there would be any follow through selling and of course there
wasn’t any. Had we seen prices open flat and then work lower
over the course of the day and fall below 13,250 it would have
carried a more ominous tone. As the day stands it was just a
little pullback. 13,240 remains support for the Dow while
13,320 is overhead resistance.
The Dow has come a long way in a short time.
When looking at this chart it is hard to believe that price
ever do anything other than move higher. We know the trend will
change in time. That isn’t meant to be good or bad, just that
we know it will eventually change.
Wednesday at 2:15 PM the FOMC will release
their policy statement. There were some earnings after the
close and it looks like a sell the good news reaction. DIS and
CSCO are both trading lower and that suggests another weak
start on Wednesday. Regardless of what happens early on, about
five seconds after 2:15 PM the programs will go gang busters.
If Tuesday is an indication, my guess is they will be setup up
to buy. It may not even matter what the FOMC says, the simple
fact "they" have something to react to is all they really want.
However, should “they” set up to sell the news, well, we have
recently seen the sort of vacuums that can develop in the
current “liquidity” driven market.
Here’s why:
The Dow was down virtually all day long. The
only time it was up was a failed attempt to get the Dow to
close higher on the day to break the record. It was down 75
points at its early morning low of 13,237.56. It then rallied
an impressive 76 points to close at 13,309.07 down 3.9. That is
just 5 points off the day’s high and less than 9 points off its
all time high reached on Monday.
Upon seeing the Dow thrust higher around Lunch
time, it was clear the Dow wanted to regain its footing and set
a new record for advancing days in a time span. It failed to
break the record, but down only four of 28 trading days is an
impressive feat.
How strong can Dow
stocks get? In February I showed a chart of GM with its
12-month PRS (Patterson relative Strength ranking,) which had
risen above 90, extremely high for GM.
Last night I said: In theory or maybe it is
just an old Wall Street saying: just prior to economic slowing,
money tends to gravitate towards the largest stocks as they are
often deemed the safest with their global exposure. The
point being that seeing the Dow and or Dow stocks significantly
out perform the market can be construed as a general market
early warning sign. The evidence below makes a strong argument
in favor of this line of thinking.
The table below shows the PRS Ranking for all
30 Dow stocks. PRS = 12-month Patterson Relative Strength,
PRS_6 = 6-month Patterson Relative Strength, RSC = Relative
Stock price Change.
Two stock of interest are MCD and HON. Both
have made very aggressive moves higher of late and their
numbers reflect their strength with 12-month PRS rankings of 86
and 80. This means MCD has out performed 86% of all stocks over
the past year while HON has performed better than 80%.
Honeywell peaked at 56.40 and is just off its
52-week high and its 12-month PRS ranking is 80. In the chart
below you can see that how rare it is for HON to perform better
than 80% of all other stocks. Historically when HON performs
this well on a relative basis, it is usually near an important
high.
In 2004 its PRS reached 78 and the stock went
sideways for many months. In 1999 HON reached a major peak just
after its highest reading of 93, and a reading of 80 in 1997
was followed by a measurable decline. The peak readings of
85-86 in late 1996 were not followed by an important high,
which is the only time readings of 80 or higher were not
followed by at least flat price action.
McDonalds is in a similar position to HON. The
12-month PRS ranking on MCD is 86. The last time MCD performed
better than 86% of all other stocks was at its 1998 and 1999
highs. Other readings of 80 or higher have also coincided with
important near-term price highs.
By the time everyone has figured out that
McDonalds is the stock to buy, the folks that bought early are
ready to book their gains. Smaller growth stocks can sustain a
very high Relative Strength ranking for prolonged periods, but
it is extremely difficult for these mega companies to even
achieve such a high level of performance. By the time they do
the bulk of the buying has been done and the stock rolls over
into a correction that can last for many months.
Below is an updated chart of GM, which was
shown February 22 based on the same considerations. GM is down
from the $36 area to about $30, about 17% lower. GM remains on
track for further erosion in its relative strength ranking, and
more often than not, when that happens a stock’s price moves
lower too.
Other Dow stocks with remarkably high PRS
Rankings: IBM, VZ, T, and MSFT. MRK can be included too, but
drug companies tend to behave a little differently from other
Dow components.
The Dow and many of its 30 components have
seen a tremendous run higher in recent weeks. During this time
many have seen their 3-month, 6-month, and now the 12-month PRS
rankings reach the 80 mark, and in some cases they have pushed
over 90, which is remarkably uncommon. Historically, these
metrics do not stay this high for very long as the natural
cycle of ups and downs catches up with the spectacular runs.
Considering the current condition of these metrics, it is
prudent to book some gains as more often than not a better
buying point waits in the not too distant future.
The S&P 500 established a solid support
line at 1500-1502 with Tuesday’s morning pullback. With
choppy action and several gap like moves over the past three
days, the SPX is tracing out a consolidation base like
formation between 1501 and 1510. As long as prices hold above
1500 this A B C consolidation, which looks complete, is setting
the stage for another upward thrust. Of course there is nothing
better to get the S&P going than comments from the Ben the
banker’s friend Bernanke and the FOMC.
With a 3-day base formation in place the SPX is positioned to
thrust higher towards 1527 on the back of the FOMC meeting.
However, should some thing go terribly wrong and the SPX not
respond with total enthusiasm, seeing the SPX below 1500 will
suggest that some sort of at least minor high is in place.
The Russell broke the key 826 level on
Tuesday, but with no follow on selling easily regained the
trading range, 826 to 834. After a series of positive days
the Russell was due for a breather. With the easy recovery,
Tuesday was nothing but a breather. With a couple of slight
down days, the Russell’s batteries should be recharged as it
has done enough correcting to resume an advance. Seeing the
Russell thrust higher above 835 should turn into a strong run
higher. But until it powers above 835, it remains somewhat
vulnerable. After all, the Dow is a gazillion new all time
highs in a row while the Russell has gone nowhere for almost a
month. Weakness in the Dow could have some serious carry over
effects.
The NASD dipped on the open just like
everything else. It bounced off its uptrend line, which runs
through support at 2550. It was a nice pullback to test
support. Seeing the NASD fall below 2550 will not look good for
the bulls. The stage is set for another FOMC driven blast off.
The catch is earnings from CSCO after the close looks like they
will weigh on the NASD on Tuesday. It looks like a case of sell
the news.
With weakness all the
Daily trends are now pointing down, plus the 3-day trend on the
NDX. In addition, the weekly trends are overdue for a downturn.
With the extended nature of the weekly high-to-high time spans,
and Tuesday’s low, the SPX stands a good chance of at least
breaking 1500 by the end of next week unless we see lower
prices over the balance of the week.
Detailed Trend Report on Web &
CLX Count and Weekly Signal Counts &
NYSE & NASD 5-day up and down volume charts
Total breadth was -1417. Considering the
paltry declines in the indices it is clear a lot of stocks were
down, but not down that much. Still, it is the second worst
breadth day in over two weeks. Note: the NYSE was the weakest
index on Tuesday. I find that odd as it has been a leader over
the balance of the current move.
Total volume was up from Monday but it was a
slower day relative to recent activity. Think building up steam
for the big event on Wednesday. Directionally volume was mixed
with better action on the NASD than the NYSE, but it wasn’t a
material change. Buying pressure continues to wane while the
indices are hugging their highs.
The NASD Trin-5 actually ticked lower, now at
3.3, which the NYSE stayed about the same. After consolidating
for two days, the Trin-5 metrics remain overbought.
The internal condition of the market:
Just about all the internal metrics I track, in just about all
the time frames I track are in a negatively divergent
configuration ranging from minor degree to major degree.
Usually when the internals form patterns of lower highs as is
currently the case, prices have already turned lower. But
today, the S&P and Dow keep grinding higher.
Internally there are a lot of similarities to
the condition one year ago at this time. In May 2006 the market
was in a narrow rally with significant internal divergences.
The difference then vs. now is a year ago it was the secondary
stocks that were leading the way higher. Today the Dow stocks
are leading the way higher, which I find a frightening thought
all by its self. If the FOMC meeting does not spark a rally in
the broader market, meaning the Russell 2000, then a long
overdue correction is going to hit, probably like a ton of
bricks.
Watch out for the program trading reaction at
exactly 2:15 PM, to be followed by the real reaction after
people have had time to actually listen / read the FOMC
statement. If the FOMC statement doesn’t trigger another
sustained thrust higher, the balance of May will likely be
difficult.
Jim Patterson
Most Obvious chart resistance levels:
()
Dow 13,310-30, 13,405
SPX 1508, 1515, 1527,
1550
NASD 2570, 2601,
2643
NDX 1900, 1907,
1918, 1936
NYSE 9830, 9930, 10,000
RUT-2K 833, 841, 847,
855
Most obvious Chart Support levels:
Dow 13,240,
13,050, 12980, 12,900, 12,825, 12,750, 12,600, 12,480, 12,350
SPX 1500, 1495,
1475, 1460, 1449, 1436, 1413, 1397, 1373, 1362, 1340
NASD 2563,
2550, 2520, 2480, 2455, 2425, 2400, 2385, 2335, 2316
NDX 1888, 1868, 1855,
1840, 1822, 1808, 1795, 1775
NYSE 9740, 9700,
9620, 9510, 9400, 9350, 9280
RUT-2K 826, 816,
808, 803, 790, 760
Here’s where we are now:
NASD 100 Index (NDX) Trading System,
trade the QQQQ:
The NDX churned sideways testing the 1888
support line. With CSCO trading $1.5 lower in after hours, that
will weigh heavily on the NDX on Tuesday.
S&P 500 (SPX) Trading
>> 3-16-07: With strength on the open
it made sense to hold off on the SDS purchase for an hour or
so. The SDS bottomed at 60.55, well below the 60.80 I am using
as an entry price. We have a full position in the SDS with an
entry of 60.80. 3-20 we added another 50% position to the SDS
when the SPX pushed above 1407. 100% @ 60.80 + 50% @ 59.60
We moved to 200% long the SDS with the addition at 54.00. That
brings our average cost to 58.8.
The SDS closed at 52.38
New Long Position:
CRNT rec Long 5/8 @ 7.58, stop 6.50 close,
target > 9, closed at 7.58
I will use Wednesday's close at the entry
price.
This is the first new entry for a momentum based PRS entry
criteria. Historically it has produced
from 4 to 20 new trading ideas per month. The goal is to find
stocks that not only have high PRS rankings, but have shown
improvement in their ranking over the past two months.
**
PRS Open Actives making noise:
No breakouts today.
Jim Patterson
Editor
Tactical Trading Outlook
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Last Updated ( Wednesday, 25 July 2007 )
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Written by Jim Patterson
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Monday, 07 May 2007 |
Here is the Deal:
Another day, another Dow Record and the broad
market is still lagging behind. With the AA deal, AA alone
added almost 32 points to the Dow, which was the bulk of the
day’s gains. For those stocks not involved in a deal, it was
flat day with a slight downward bias.
After a positive open, most indices trended
lower over the balance of the day with the exception of the
Dow, which managed to close near its highs of the day. 13,330
remains a minor Fibonacci upside target followed by 13,400, but
Tuesday should be a quiet day before the FOMC meeting on
Wednesday. Sliding below 13,280 is the first warning flag for
the bulls, which for now remain firmly in control.
The good news is there wasn’t any noticeable
late day weakness for the Dow. Then again, breadth peaked on
the open and reached its lowest level with an hour to trade.
But it did rise in the final hour showing some buying support.
Bottom line, outside the deal related moves, there wasn’t any
volume on Monday. Most investors are in hurry up and wait for
the FOMC mode.
Wholesale Inventory numbers Tuesday morning
won’t have much impact ahead of the FOMC meeting on Wednesday.
The last FOMC meeting really ignited the current rally. Should
there be a detectable shift in sentiment vs. the perceived
direction of the Fed, it is possible this meeting could end it.
Note: The May 10, 2006 high was triggered by an FOMC meeting
one year ago.
Tuesday should be a lot like Monday meaning a
flat to somewhat corrective / consolidation like day. The Dow’s
action continues to paint a better looking picture than the
broader indices indicate. For now that means the broad market
is consolidating while the Dow continues its record run. Of
the past nine FOMC meetings, six saw the Dow gain about 40
points on average the day before the announcement, while the
Dow fell about 20 points on the other three. Either way, we
shouldn’t expect much.
Here’s why:
The Dow was never really down on the day. It
was up 53.07 at its new record high of 13,317.69, and by
closing at 13,312.97 up 48.35 points it tied a record seen only
once before. The Dow has closed higher 24 of the past 27
trading days, which ties the best run ever, which ended in
August 1927.
The trading range for the past three days has
been very tight at just 50, 55, and 57, points. Over the past
15 months, very narrow 3-day trading ranges have been followed
by at least a minor correction. If it didn’t begin immediately,
it began after a very narrow four day trading range. In other
words, the narrow range argues for either one more narrow range
day with only a very minor price change, OR, prices move lower
on Tuesday expanding the currently narrow trading range.
The S&P 500 gapped higher and closed a step
closer to 1527.46, which now really is just one good up day
away. Of course, it is probably important to note that the
S&P 500 opened higher reaching its highest level for the day
within the first half hour of trading. Not that it wasn’t a
good day, but it is clear there was no aggressive buying or
demand for stocks after the opening hype subsided.
With only a token new high on the open, all support and
resistance levels remain in tact for the most part. Sliding
below 1503 for more than a brief moment could suggest something
more sinister is at hand. Resistance remains about 1508-1510,
with the big 1527.46 waving around out there.
The Russell is wound up and ready to do
something. That something should be a thrust higher. But,
after five consecutive days of positive breadth, along with the
historical tendency to tick lower before resuming an uptrend,
odds seem to favor a noticeable down day before the RUT snaps
higher. It reached 835 Monday, in line with the April 25 and 26
peaks. Both of those were followed by noticeable selling. Just
keep your eye on that 826 level. The last time it broke the
bottom fell out for about a day.
The NASD closed lower while the Dow set a new
record high. The trend of S&P and Dow out performance
continues, which is a bit discouraging to those that favor the
OTC stocks. The negative price divergence never looks healthy
either. For now this is the trend and until it changes, the big
money remains attracted to the mega stocks.
One note on that last comment: In theory or
maybe it is just an old Wall Street saying: just prior to
economic slowing, money tends to gravitate towards the largest
stocks as they are often deemed the safest with their global
exposure. Granted, “Global Exposure” in the current context
carries greater meaning as the Dow 30 gets a lot more of their
earnings outside of the US. Perhaps that means greater
insulation on the earnings front, but should market sentiment
change drastically this kind of argument won’t hold much water
within the big picture.
Despite a healthy open,
the NDX was unable to turn its daily trend up on Monday.
The S&P 500’s last weekly high was February 22, which was 74
days ago. That is a remarkably long. In fact, it is the longest
weekly high-to-high time span since an 87 day stretch that
ended in June 1997. The S&P would have to fall below
1476 to turn its weekly trend down this week and next week it
will have to fall below at least 1505. The Dow’s weekly
high-to-high time span is currently 57 days. That isn’t a
record, but it is outside 1 standard deviation for the series.
Like everything else right now, it is due for a down
spell.
Detailed Trend Report on Web &
CLX Count and Weekly Signal Counts &
NYSE & NASD 5-day up and down volume charts
Total breadth was +141 with the NYSE positive
and the OTC negative. It peaked in the first half hour and slid
lower all day long. In short, the Dow’s 48 point advance is not
representative of what happened across the broad market.
Total volume was way down at just 2.1 billion
shares, one of the slowest days in a month. While Monday’s
light volume is likely related to hesitation before the FOMC
meeting on Wednesday, it is rather interesting that after just
seeing increased volume with very little upside progress. We
are now seeing new highs on poor volume. It is subtle, and like
most subtle aspects over the past month, may not amount to
anything. However, these are characteristics we watch for to
suggest a change of trend is approaching.
With virtual new highs, 8-day Buying pressure
of 53.4% is well off the 65% level seen on the last surge
higher. This is material because the internals have been
positive for five consecutive days, with the Dow going nuts. At
the same time, there has been a noticeable fall off in the
internal health of the move.
The NYSE 10-day AD line peaked on 3/21 and has
made lower highs on 4/16, 4/25, and now 5/3. This is a
pronounced display of waning upside momentum despite the five
consecutive days of positive internals.
The Trin-5 metrics are again very low, with
the NASD below 4, which is very overbought. In addition,
despite closing higher for a fifth consecutive day and at a new
high, the Dow’s 5-day RSI still has not bettered the 90.2
reading reached before its last down day.
Friday the market floundered after News driven
positive open. Monday, the same thing happened, except the
internals were weaker.
After five consecutive up days we should be
looking for a breather on Tuesday. But the FOMC meets on
Wednesday and aside from the May 2006 high, most FOMC meetings
were followed by a mild correction or immediately higher
prices. Historically the action has been pretty tame the day
before. It is time to get into hurry up and wait mode.
Jim Patterson
Most Obvious chart resistance levels:
()
Dow 13,310-30, 13,405
SPX 1508, 1515, 1521,
1550
NASD 2570, 2601,
2643
NDX 1900, 1907,
1918, 1936
NYSE 9850, 9930, 10,000
RUT-2K 833, 841, 847,
855
Most obvious Chart Support levels:
Dow 13,190, 13,050,
12980, 12,900, 12,825, 12,750, 12,600, 12,480, 12,350
SPX 1503, 495, 1475,
1460, 1449, 1436, 1413, 1397, 1373, 1362, 1340
NASD 2563, 2550, 2520,
2480, 2455, 2425, 2400, 2385, 2335, 2316
NDX 1888, 1868, 1855,
1840, 1822, 1808, 1795, 1775
NYSE 9760, 9700, 9620,
9510, 9400, 9350, 9280
RUT-2K 826, 816, 808,
803, 790, 760
Here’s where we are now:
NASD 100 Index (NDX) Trading System,
trade the QQQQ:
On April 26, the NDX reached a high of 1896.77
and Monday, a week and a half later, it closed at 1895.96. That
isn’t exactly what I would call a rally. This reflects poorly
as the Dow has advanced considerably over the past ten days. On
the next push up through 1905 the NDX should gain some serious
upside traction, but it has to get there. 1888 remains the
breakdown level.
S&P 500 (SPX) Trading
>> 3-16-07: With strength on the open
it made sense to hold off on the SDS purchase for an hour or
so. The SDS bottomed at 60.55, well below the 60.80 I am using
as an entry price. We have a full position in the SDS with an
entry of 60.80. 3-20 we added another 50% position to the SDS
when the SPX pushed above 1407. 100% @ 60.80 + 50% @ 59.60
We moved to 200% long the SDS with the addition at 54.00. That
brings our average cost to 58.8.
The SDS closed at 52.39
No positions leading up to the FOMC meeting.
**
PRS Open Actives making noise:
No action on a relatively quiet day.
Jim Patterson
Editor
Tactical Trading Outlook
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Last Updated ( Wednesday, 25 July 2007 )
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Written by Jim Patterson
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Sunday, 06 May 2007 |
Here is the Deal:
With very positive pre-market action Friday
morning we instantly knew the market’s chosen path; of course
it was higher. But all the day’s strength came in the morning
thanks to overnight action plus a minor boost from the Non-farm
payroll report. Essentially, it was another gap higher followed
by consolidation mode…with an upward bias of course. The Dow
added 143 points for the week, the smallest gain of the past
three weeks. The Dow’s rally is slowing down, but Friday was a
solid day for the market.
13,190 was never a factor but Friday’s
strength did little to establish higher support levels. We can
squeeze in a minor line at 13,240-50, but the support line of
meaning remains just below 13,200. Looking at the upside
Fibonacci targets, 13,300 remains with a minor line above there
at 13,325, and then comes 13,403. At the current rate of gain,
about 150 points per week (provided the trend holds) the Fib
line at 13,403 could be reached by the end of the week. Seeing
the Dow below 13,240 is a warning flag for a possible break of
13,190, which would be a more important breach of trend.
The Dow closed 20 points off its high due to a
lot of buy on close orders. But the price action was still weak
in the final half hour of trading.
The big economic event this week is the FOMC
meeting on Wednesday the 9th followed by PPI data
and Retail Sales on Friday. FOMC meetings can rock the market
but with little expected to happen at this one, we may simple
see some anxious consolidation at the first of the week.
Here’s why:
The Dow was up 43 at its high of 13,284 as the
records continue to fall. It closed 20 points off the high of
the day with a 23 point gain at 13,264.62. It is up 23 of 26
trading days.
After further analysis, and a different set of
historical Dow prices which includes Saturdays, the biggest run
on record is up 24 of 27 trading days, which ended August 2,
1927. The Dow gained 11.6% for the move, corrected for a week,
and continued higher into a mild September peak. For the
record, the Dow has gained 7.8% rising 23 of 26 trading days.
They just don’t make then the way they used to.
The S&P 500 sprinted above 1508 on Friday.
While it was unable to hold 1508, it held at Thursday’s
high 1503 on the pullback. The 2000 closing high is 1527.46,
which is one or two good days away…. The push higher
established a slightly higher level to watch, 1503. On a very
short-term basis, above 1503 is bullish, below 1503 is a
warning flag. It will take a break of 1498 to really alarm the
bulls. At present the pattern of higher lows continues and
until a support level of importance is broken watch for higher
prices. However, the pullback a week ago should serve as a
warning as to how fast prices can pullback.
The Russell continues to lag, or is it
coiling and getting ready to explode to the upside? After a
brief excursion down to 808, the Russell remains within 826 and
833. Earnings are great and with solid market momentum, if the
Russell fails to breakout to the upside it won’t look good, at
all. For now the Russell is in a range, 826 to 833 and has been
moving sideways for three weeks. Below 820 looks bad for the
bulls, above 833 looks bad for the bears.
After the brief correction the NASD is pushing
higher. However, in keeping with the historical pattern it
struggled to make progress on Friday despite getting off to a
really good start. 2560 is the level to watch. As long as 2560
holds the trend is higher.
While most indices were solid, the NDX
suffered on Friday. Because of the mid-day round of selling the
NDX failed to turn its 3-day trend back up after making a new
high for the move. The rest of the trends are as strong as they
get.
Detailed Trend Report on Web &
CLX Count and Weekly Signal Counts &
NYSE & NASD 5-day up and down volume charts
Total breadth was +1019 and total volume was
even with Thursday, which makes Friday a busy day relatively
speaking. Directionally volume was to the upside, but not
significantly.
NYSE 5-day up volume continues to diverge
negatively vs. new highs for the Dow, NYSE, and S&P 500. This
negative divergence could easily be rectified on Monday with a
big volume advance.
Along with the NYSE 5-day advancing volume,
the 5-day RSI reading still has not bettered its most recent
peak of 90, which itself is a lower high.
The Dow’s CLX reading on Friday was 8, down
from 9 on Thursday and 14 on Wednesday. That isn’t a very
healthy trend considering the Dow closed higher all three days.
The CLX counts on the S&P 500 and NDX are acting the same way,
they are contracting as prices work higher.
The Dow’s weekly trend count is stuck at 20.
The day and a half of corrective action on Monday and Tuesday
pulled it down from 26 to 18, and only two stocks regained
their trend. Yes, it is another nagging divergence. On the S&P
500 the divergence is a little more pronounced. The Weekly
trend count on the SPX peaked at 403 on the 23rd,
and has risen from 233 to 270 as of Friday. The correction at
the first of the week took a big bite out of the trend count on
the S&P 500 and these recent new highs are not restoring much
health to the count.
Once past the news driven open, the market
floundered.
The FOMC meets Wednesday May 9, so watch for
action at 2:15 on Wednesday. This move really got going off the
reaction to the March 21 FOMC meeting. Could the FOMC meetings
bookend the move?
-
Recent FOMC Meetings and Reactions:
- March 28, 2006, Dow had already peaked, slide
lower for a few more days and recovered. This meeting had very
little impact.
- May 10, 2006 was the 2006 high.
- June 29, Dow jumped 217 points.
- August 8, 2006 was followed by a down 97 point
move on the 9th, which was quickly recovered.
- September 20, 2006 was followed by two down
days and straight up.
- October 25, 2006, Dow Peaked on the 26 and
corrected for 5 days.
- December 12, 2006, not much happened, but the
Dow quickly moved higher in the following days.
- January 31, 2007, Dow up 98 points, minor peak
a few days later.
- March 21, 2007, Blast off, Dow up 158 points.
The Dow is on a huge run while the Russell
2000 has been going sideways for three weeks. With earnings
season more or less over for the Major Mega-Cap stocks, from a
new stand point the Dow has used up its supply of News driving
forces. Considering the Russell has not advanced much, it is
doubtful the remaining secondary stock earnings reports will
provide the lift the big ones did. That said; look for some
nervous consolidation (with an upward bias of course) leading
up to Wednesday’s FOMC meeting when Ben the bankers friend
Bernanke will be positioned to gas the market some more.
Jim Patterson
Most Obvious chart resistance levels:
()
Dow 13,275, 13,310-30,
13,405
SPX 1508, 1515, 1521,
1550
NASD 2570, 2601,
2643
NDX 1900, 1907,
1918, 1936
NYSE 9801, 9850,
9930, 10,000
RUT-2K 833, 841, 847,
855
Most obvious Chart Support levels:
Dow 13,190, 13,050,
12980, 12,900, 12,825, 12,750, 12,600, 12,480, 12,350
SPX 1503, 495, 1475,
1460, 1449, 1436, 1413, 1397, 1373, 1362, 1340
NASD 2563, 2550, 2520,
2480, 2455, 2425, 2400, 2385, 2335, 2316
NDX 1888, 1868, 1855,
1840, 1822, 1808, 1795, 1775
NYSE 9760, 9700, 9620,
9510, 9400, 9350, 9280
RUT-2K 826, 816, 808,
803, 790, 760
Here’s where we are now:
NASD 100 Index (NDX) Trading System,
trade the QQQQ:
The NDX reached 1905, but couldn’t hold it. It
did hold at 1888, and that is the support level to watch. The
NDX has made virtually no upward progress since April 26 while
the Dow makes new record highs.
S&P 500 (SPX) Trading
>> 3-16-07: With strength on the open
it made sense to hold off on the SDS purchase for an hour or
so. The SDS bottomed at 60.55, well below the 60.80 I am using
as an entry price. We have a full position in the SDS with an
entry of 60.80. 3-20 we added another 50% position to the SDS
when the SPX pushed above 1407. 100% @ 60.80 + 50% @ 59.60
We moved to 200% long the SDS with the addition at 54.00. That
brings our average cost to 58.8.
The SDS closed at 52.29
Stocks to watch: WGOV, HUBG, CPNO, IPS, ELON,
REGN, VHI, and DNDN.
**
PRS Open Actives making noise:
ICE cleared 135 closing at 138.4, which
should clear the way for ICE to move back to its old highs.
That puts it well above its 20 and 50 day moving averages, and
with one more positive close the 20-day average should cross
back above its 50-day average.
Jim Patterson
Editor
Tactical Trading Outlook
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Last Updated ( Sunday, 06 May 2007 )
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More...
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TTO Daily Update 05-03-07
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TTO Daily Outlook 05-02-07
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TTO Daily Update 05-01-07
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TTO Daily Update 04-30-07
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TTO Weekend Update 04-29-07
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TTO Daily Update 04-26-07
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TTO Daily Update 04-25-07
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TTO Daily Update 04-24-07, It is time for a real pullback
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TTO Daily Update 04-23-07, A down day, but it wasn't much of a down day
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TTO Weekend Update 04-22-07
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