Here’s the Deal:
Ben the Banker’s Friend spoke and that’s all
there is to it. Actually, the futures market jumped higher just
before midnight Thursday night as overseas markets enjoyed a
strong day. That’s where the opening gap higher came from. And
then at 10, Ben didn’t let anyone down with his steady message;
the Fed will do what it needs to do to grease the machine.
However, I am getting the feeling that while he is going to cut
rates, he really doesn’t want to.
The market was up big and avoided closing
lower for a third consecutive month. The Dow ran all the way up
to 13,400 resistance and stayed there for the balance of the
day. The Dow wasted little time clearing the 13,300 level,
which targeted 13,400. Now we can focus on 13,700. The larger
76% line is at 13,425, so a close above there should target
13,700.
At this point a slide below 13,300 will look
unfavorable from a pattern stand point. Not dreadful, but
certainly out of line with expectations. I will say, as good as
the day was, it was also as slow as we expected it to be.
Enjoy the long weekend. Tuesday starts the
month of September. While it looks like smooth sailing now, we
are still running in a very tight pack on the high banked oval.
Enjoy the Long Weened
Jim
Here’re the Details:
The Dow gapped higher and at the highs was up
190 on the day reaching 13,428, almost exactly the bigger 76%
retracement line. A close above Friday’s high will look bullish
targeting 13,700. The Dow closed at 13,357 up 119 on the day.
That is a notable 71 points off the high of the day. Technically it was a solid low volume final day for the month.
IBM, MMM, and HD added 34 points to the Dow.
Interest rates, the 90-T-Bill rate rose,
but remains remarkably low: It would be nice if short rates
would and or could go back to the lows of yesteryear, but that
isn’t likely to happen any time soon. The long rate can
continue its track towards lower levels over the near-term, but
once we see the size of the rate cut the TYX will probably
start tracking higher.
S&P 500, the targets fell like dominos:
With the gap higher 1462 and 1470 were both taken out. That
pointed the way to 1480, which was also reached. And with the
close above 1472 we can target the 1500 highs. It will take a
notable break of 1460 to give the bears anything reasonable to
stand on.
The Russell 2000: was able to get above
789, but just barely. The high was 795 and it closed at 793. It
was a good day with strong breadth, but it wasn’t any sort of
upside breakout. Considering the very low volume, that is
probably a good thing.
The NASD is just a tick away from a close
above 2600. From a reverse head and shoulders pattern stand
point, just a little higher and we can target much higher
levels.
After two down months, August was an up month.
As good as that sounds, the indices still have some work to do
if they are going to turn their monthly trends back up.
The Detailed Trend report, CLX Charts, Weekly Trend Signal
Count Charts, have been moved to a new location at this link.
This link now has a Chart of NYSE 8-day Buying and Selling
pressure, plus a few others.
Total breadth was huge at +3557. With numbers
like that we should have seen larger moves in the indices. At
the end of the day, a lot of stocks moved a little bit higher
on relatively light end of month volume.
Directional volume was all to the upside. The Buying Pressure
lines are showing a little life while selling pressure remains
about as low as it gets.
The H-Buy signals both remain in effect. At
this point take steps to protect gains.
Note: last Friday the market closed at an
important near-term high.
Folks were caution at the end of trading on
Thursday with Ben to speak at 10 AM. Overnight strength gave us
a gap up open and Ben said what the market wanted to hear. Bush
did too. And with that, it was light trading on the last day of
the month going into a long weekend.
Hindsight is 20/20. Since 1915, August 31 has fallen on a
Friday 13 times. The Dow closed higher 12 of those 13.
Interestingly, the one year it closed lower, 1917. The
record is now 13 of 14.
September is a new month. The technical
picture is very constructive going into September. Note:
September 2005 and September 2006 were both up months. 1951,
1964, and 1997 are the years when we saw three consecutive
positive Septembers in a row. Of the last 12 September s, 6 up,
and 6 down, but the six before that were all down.
One line of thinking, the August low was so dramatic because
everyone was doing their pre-September selling early.
Looking at the short week ahead, seasonality
says up early in the week. Then the price action should quickly
weaken as the seasonal tendencies of September take hold.
Jim Patterson
Most Obvious chart resistance levels:
()
Dow
13,000, 13175, 13,295, 13,350,
13,490, 13,580, 13,630,
13700, 13,825
SPX
1420, 1439, 1455, 1460,
1470, 1480, 1489, 1496, 1505,
1517, 1527, 1535, 1547
NASD
2490, 2500, 2520, 2558, 2580,
2605, 2629, 2649, 2664, 2680, 2700,
2735
NDX
1855, 1895-1900,
1920, 1945, 1954, 1962, 1982,
2000, 2018, 2045, 2056, 2100
NYSE
9189, 9340, 9395, 9470, 9530, 9620,
9730, 9860, 9920 10,000,
RUT-2K
765, 772, 789, 794, 800,
813, 822, 832, 838, 842, 848, 854-856, 861, 876
Most obvious Chart Support levels:
Dow
13,580, 13,490, 13,300, 13,200 -
13,175, 12,985, 12,815, 12,677,
12,547
SPX
1483, 1475,
1470, 1453, 1444, 1428,
1418, 1400, 1395, 1380, 1360
NASD
2655, 2635, 2606, 2592, 2578, 2570, 2558,
2529, 2498, 2450, 2423, 2400
NDX
2000, 1973,
1965, 1954, 1945, 1923,
1896, 1875, 1860, 1838, 1810
NYSE
9800, 9720, 9620, 9585,
9525, 9405, 9308, 9220, 9186,
9025, 8925, 8800
RUT-2K
834, 828, 820, 808- 810, 803, 794, 787,
782, 777, 772, 765, 760, 746, 736
Here’s where we are now:
NASD 100 Index (NDX) Trading System,
trade the QQQQ:
If the NDX is going to stall, it should be
around 2,000. That doesn’t mean it will of course.
Long-term 3-peaks
and domed house pattern target, 1720.
S&P 500 (SPX) Trading
The technical action was pointing higher and
it went higher. With the close above 1472 we can target 1500.
Tactical Stock Trading Powered by the PRS Stock report
BBD rec long 5/31 @ 25.39, stop 23, Target
29.5, closed at 24.68
CHINA rec long 6-14 @ 8.56, stop 8.01, closed at 8.79
WFR rec Long 8/22 @ 58.95, stop 54 closing, closed at 61.42
BRLC rec Long 8/24 @ 6.38, stop 5.80, closed at 6.50 – Needs to
get over 6.70
**
PRS Open Actives making noise:
Jim Patterson
Editor
Tactical Trading Outlook
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