US - Market Direction 01 (May 08 - Jul 08)

[winston]

Lets see who wins BIG this round.

Maybe things could stay flat for a while..

[kennynah]

Maybe things could stay flat for a while..

W .. hmmmmm...... that crossed my mind 2 hours ago.... as in ranged bound between 25 - 60 percentile range of the high-low formed from Nov07 to Mar08, for a while to come....possibly forming a base-like pattern before eventually breaking out when all smog is clear many moons later... but just TOL....only, mustnt predict...dangerous

telepathy at work....haha..

[kennynah]

As we have come to realize, Naz is the strongest of the 3 indexes. Hence, i like to give focus on Naz Composite index.

Let's flash through 2 weekly charts, so that we can see the overall Price Formations.

I will use SMH - Semiconductor Holdrs Trust and Nazdaq Composite Index.

First let's review Naz Comp Index.

But before that, it is noteworthy to highlight that[b] Naz Comp Index ended last week above the MA50 line. When seen just from this indicator, we may conclude that it is a [b]bullish indicator. However, this is seen from a 1 Year Daily Chart and as we all know, Monthly readings are more accurate than Weekly data, whichly is again more accurate than a Daily indications.

This is how the Weekly Nazdaq chart looks like, with my TA commentaries within...(click on the chart to see the manified version)



Perhaps, it does not appear as Bullish as the Daily chart.

Now, let's review the Semicon Holdrs Trust - SMH. What is most notable is that this chart appears to "lead" the rise and fall of Nazdaq Composite Index. I draw your attention to the fact that SMH started falling before Naz actually fell at the end of 2007. SMH again started rallying in Feb08, again before Nazdaq started it's recovery in Mar08.
Now, SMH seem to be forming a "Bearish Engulfing" pattern, perhaps signalling a downturn.



Finally, most of us, may have the impression that as long as one of the 3 major indexes perform sterlingly well, the laggard will follow. Or conversely, now that Nazdaq appears (initial impression) that it is "cheonging" up, that DOW, the sick child will be given the necessary boost to end it's recent rut..

It is for this reason, that i am highlighting the need not be too carried away, believing that Nazdaq will be the jumping rabbit popping out of the magician's hat (or is it truely to be one happy bugs bunny)...

your views and comments are most welcome...

good luck folks...happy trading and at Huatopedia....everyday is a Huat Huat Day....

[winston]

<<< K: now that Nazdaq appears (initial impression) that it is "cheonging" up, that DOW, the sick child will be given the necessary boost to end it's recent rut... >>>

1) Would need to understand why the component stocks of the Naz is moving up

2) Are IT & internet companies immuned from the slowdown ?

3) Were there a lot of Corporate spending on IT hardware & software recently ?

[kennynah]

<<< K: now that Nazdaq appears (initial impression) that it is "cheonging" up, that DOW, the sick child will be given the necessary boost to end it's recent rut... >>>

1) Would need to understand why the component stocks of the Naz is moving up

2) Are IT & internet companies immuned from the slowdown ?

3) Were there a lot of Corporate spending on IT hardware & software recently ?

generally, it's common knowledge that TA encompasses all findamental reasons within. as such, most TA practioners will not normally bother to justify the charts' movements.

nevertheless, you are very astute to ask these questions... i pondered to try to understand why Naz movement has been so different from overall equities down movement in the last 2 weeks.

i recall then that ever since IBM's 1Q earnings report, most other large cap IT companies with international exposure also reported generally good earnings; eg. AAPL, MSFT, RIMM, INTC and the most recent DELL

perhaps, then that funds going into equities decided choose tech related counters over financials or home builders...a quick check especially on the ETFs related to Financials and Home Builders will show a general downtrend until now.

thanks for your comments.

[winston]

Hi k,

Thanks for the kind comments.

I agree that TA encompasses all fundamental reasons. The answers normally comes later, after the TA indicators have shown it.

Take care,
Winston

[kennynah]

hi all,

DOW futures has a critical support at 12,555.... if this cannot hold...which has just been breached downwards... then we may be in for a rough ride ahead...

still early in the night...we will watch it closely...including Volume...

wachovia's CEO being sacked this morning, does nto augur well for the financial sector overall...

[kennynah]

hi all,

SP500 is challenging the MA50 support at 1380... which it had successfully breached at this hour... let's wait to see how it closes later...

[winston]

Hi MM & kennynah.

With the drop in the US markets last night, what are your indicators telling you ?

Thanks,
Winston

P/S I'm sitting on some puts and calls in HK and want to make use of the situation today to clean things up a bit.

[kennynah]

dea w : thanks for asking...

this is what is appearing to me ....comments are rather self-explanatory within the charts

Naz


DOW


SPX