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Daily Market Comments - October 2006


10/31 - Stock Market Comments


There should not be anything scary in today's Halloween trading. Although the Dow was just slightly off on the day, the NASDAQ showed positive trading. This clearly indicated there was no change of investor sentiment in the current uptrend. Crude oil prices continue to drop, showing the lack of credibility of the OPEC's nations being able to cut production. Continue to hold long positions until a definite change occurs in investor sentiment, the witnessing of a severe sell signal. 

10/30 - Stock Market Comments

The Dow formed a Bearish Engulfing signal on Friday. The NASDAQ showed a bearish candle, but it was not a signal. Anticipate a couple of days of profit-taking. The markets have had a good, steady up-move. Until a dramatic sell signal reveals a change of investor sentiment, the trend should still be the predominant indicator. This morning's futures are opening weaker. However, there is not any dramatic news out there that would currently change investor sentiment yet. Continue to hold long positions but be ready to take some profits on charts that are starting to break down. Crude oil  prices do not seem to be a factor. Interest rates do not seem to be a factor. Anticipate today's trading as continuation of profit-taking that started on Friday.

10/27 - Stock Market Comments

The trend continued Thursday with no signs of any change of investor sentiment. The trend is very healthy in that the profit-taking occurs during the day with the buying coming back in before the close. With so many days to the positive side, expect some profit-taking in the next few days. However, unless there is a severe sell signals, illustrating a definite change of investor sentiment, this uptrend should continue. Stay  long and be nimble.   

10/26 - Stock Market Comments

The uptrend in both the Dow and the NASDAQ remains healthy. The uptrend should continue until we see the exuberant buying coming into the markets. Until that time, continue to hold your long positions. Although crude oil prices showed strength on Wednesday, it more than likely is just a bounce. The integrity of OPEC's production cuts usually becomes very suspect after a few weeks, each nation wants to crank out as much oil as they can at these higher prices.

10/25 - Stock Market Comments

Nothing changed the upward direction of the markets. The Dow was up, the NASDAQ was down. This indicates there are no sellers in the market yet. Continue to hold long positions. This is a perfect market for maintaining positions where the candlestick signals reveal strong buying and shorting positions when strong sell signals appear. Positions are now moving based on the action of their individual signals versus being influenced by large market swings.

10/24 - Stock Market Comments

It is another strong day in the Dow, the NASDAQ is decently bullish. The combination of the two reveals nothing more then continued bullishness in this uptrend. As recommended in the previous ten trading days, stay long but watch for a severe sell signal.    

10/23 - Stock Market Comments

The markets traded lower all day on Friday but showed strength  going into the close. This kept the trading very much in the middle of the uptrending channel. Nothing yet has changed investor sentiment. Continue to hold long positions. Add short positions occasionally as charts indicate strong sell signals, such as Kicker signals to the downside. Be nimble and watch for a severe sell signals.

10/20 - Stock Market Comments

This morning the futures are down hefty due to the Dow and the Caterpillar report, while the NASDAQ is relatively stable  due to the Google report. Over the past few days of trading, the Dow  has remained relatively positive while the NASDAQ sold off a  little bit. This is typical of a trending market. When one index  is  showing reasonable strength while another index may be selling off,  it is a good indication that the money is not leaving the market, just  moving from sector to sector. As recommended over the past few weeks,  continue to hold long positions but be nimble. The uptrend should  continue until a severe sell signal is witnessed.

10/19 - Stock Market Comments

The Dow traded positive on Wednesday but closed well off its  highs. It almost formed a Shooting Star signal, but not quite. The  NASDAQ formed a Two Dark Crows signal. This signal is created from a  dark candle followed by a second dark candle that opens where the first  dark candle opened but proceeded to go back down the second day. This  is a bearish signal. The markets may be getting a little bit  tired. Expect a possible pullback at these levels. However, until both  market indexes reveal a strong sell signal at the same time, anticipate  that the trend will still be the major analytical factor. Be willing to  take some profits  in positions starting to show weakness but also be  ready to reinvest if the trend channel indicates support. 

10/18 - Stock Market Comments

The early morning selling on Tuesday was the first sign that the  sellers 'might' be taking control. However, by the end of the day, the  Bulls that have been controlling the trend came back into the  market. The uptrend, that has been evident for the past two months,  remains the predominant indicator. Today's morning futures show more  upside potential. The uptrend will continue until a dramatic change of  investor sentiment becomes evident. That should be in the form of a  large price move in the indexes in the overbought conditions. When you  see exuberant buying coming into these markets, be prepared to take  profits. That could be today, or it could be two weeks from now. Stay  long but be nimble.

10/17 - Stock Market Comments

The Dow is approaching the 12,000 mark. This may not have any great  relevance other than 12,000 is a round number. Monday traded as a  relatively strong day, not showing any signs of investors  selling. However, this morning's futures indicate a possible pullback,  which would not be unusual after the number of days that have traded  positive in the indexes. Expect some consolidation but until a severe  candlestick sell signal appears, the uptrending channels in these  markets are still the predominant indicators. Crude oil prices and  natural gas prices are moving higher, this could lead to a short-term  selloff in the equity markets. Be prepared take some profits today.

10/16 - Stock Market Comments

Thursday's strong bullish day provided an opportunity for Friday to  be a consolidation day. Trading did move lower most of the day on  Friday but came back up in the final hours to trade positive in the  Dow. The NASDAQ traded positive most of the day. This clearly  illustrates that the Bulls have not left this market. Both indexes are  trading above the upper trend channel which had been acting as  resistance for the past couple of months. Stochastics are in the  overbought conditions. This all leads to a potential pullback. However,  there has not been any candlestick sell signals yet in this market.  Continue to hold long positions until a definite sell signal appears.

10/13 - Stock Market Comments

The indecisive trading in the Dow in the previous five trading days  produced one of two scenarios, on weakness Thursday it could be  anticipated that profit-taking would take the Dow back down to the 20  day moving average. On strength, it would indicate that the uptrend was  still in progress. A rule of thumb is that after a series of indecisive  trading, the direction of the trend will be seen by how they move the  price after that period of indecision. After the strong move of  Thursday, we would not be surprised to see some consolidation on a  Friday. Continue to hold long positions until a severe sell signal  appears. 

10/12 - Stock Market Comments

The early-morning selloffs in the markets were followed by buying  going into the close. This illustrates that the Bulls have not left the  markets. Continue to hold long positions until a definite sell signal   appears. The positive morning futures indicate that there is no  selling yet coming into the market. Continue to hold long positions   

10/11 - Stock Market Comments

Once again the markets did not show any evidence that the Bulls were  starting to step away. This morning, the futures are showing weakness,  but not to any great magnitude. Alcoa reported good earnings but it was  not anywhere near the projections. That appears to be the cause for the  weakness this morning. Continue to hold long positions until a dramatic  sell signal appears in this market. Potential short positions should be  identified, in preparation for the breakdown of the trend. However, as  of now there is still no evidence it would alter the uptrend.

10/10 - Stock Market Comments

The Korean nuclear test was a perfect opportunity for the markets to  take some profits. Both the Dow and the NASDAQ have been trading in the  overbought condition. However, as was seen in Monday's trading, the  Bulls continued to show their presence. This morning's futures are also  showing just a very slight positive bias. Continue to hold long  positions until a severe sell signal indicates that this uptrend is  over. Crude oil prices are still in a downward trend channel. Interest  rates, on the other hand, are moving back up slightly, but not yet to  the magnitude of disturbing investor sentiment.   

10/9 - Stock Market Comments

The Dow formed a Hanging Man signal on Friday. The NASDAQ formed a  Spinning Top/Harami. Both signals indicated indecision. The news of the  Korean nuclear test is now putting more doubt in the markets. The  pre-market futures are showing some weakness but not nearly as much as  might be expected. Continue to hold long positions but be diligent as  to what the markets do today. The Korean news could become a  psychological deterrent to the uptrending market. A weak close today in  the markets would confirm the potential reversal signals of Friday. Be  prepared to lighten up on the long positions.

10/6 - Stock Market Comments

After the large bullish day on Wednesday, seeing some consolidation  on Thursday would not have been unusual. However, what little  consolidation there was got followed by buying going into the  close. This produced another day above the recent upper trend  line. This morning the futures are a little bit weak after the jobs  report. It would not be unusual to see some consolidation today, on a  Friday. Continue to hold long positions. As mentioned in last night's  chat room, there are numerous stock charts that are showing excellent  buys. Interest rates in crude oil prices do not seem to have any  deterring effect on investor sentiment. The uptrend should continue  until we see that severe reversal signal.

10/5 - Stock Market Comments

After attempting to break through the upper trend channel for the  last couple of months, the Dow went through Wednesday with good  conviction. The NASDAQ had a huge day as well. This morning's futures  are not showing much of a consolidation. Unfortunately, the decision  from OPEC to cut production is adding strength to the crude oil prices.  This can now be the damper that slows down the uptrend in the equity  markets. Same-store sales are extremely strong this morning. As of now,  there is no signals to indicate that the uptrend is over. If the  indexes move up from this level, any pullbacks should see support on  the upper trend line that has acted as resistance for the past few  months. Continue to stay long until a dramatic sell signal appears.  

10/4 - Stock Market Comments

The Dow closed at an all-time high on Tuesday. However, it has done  so in a stealth rally. Although the Dow is at an all-time high, many  stocks/sectors have just been limping along for the past few months.  This morning the futures are down slightly. The NASDAQ came back and  just touched the 20 day moving average Tuesday before forming a  Spinning Top. Stochastics are still heading down. This scenario would  indicate a day or two of a sideways moving market until the stochastics  can start bottoming and curling back up. Continue to hold long  positions. Short positions established in a last couple of days need to  be watched closely. Crude oil prices will continue to have a bullish  effect on the markets if they keep dropping as fast as they have over  the past month. 

10/3 - Stock Market Comments

The Dow did not show as much weakness on Monday as the NASDAQ. This  morning's futures are showing the NASDAQ opening right near the 20 day  moving average, the expected target of the lower end of the trend  channel. Be prepared for support at that level. Crude oil prices keep  showing weakness. The 10 year treasury note is maintaining its  strength, keeping interest rates relatively low. The upward trend  channel in the Dow and the NASDAQ should still be the predominant  analytical factor. Expect trading to support at the lower end of the  trend channel and bounce again. A breakdown through the lower end of  that channel would indicate a change of investor sentiment. However,  there does not seem to be anything that would stimulate that change.

10/2 - Stock Market Comments

The top of the uptrending channel once again deterred any  strong  buying breakout. Although a close at an all-time high in the Dow is  dominating the news broadcasts, it is still a less important factor  than the overall investor sentiment. The weakness in the markets on  Friday, a Bearish Engulfing signal in the NASDAQ and almost a Bearish  Engulfing signal in the Dow, indicated that the uptrending channel was  still the dominant analytical factor. Anticipate a day or two of a  pullback but the pullback will continue to remain in the upward trading  channel. Any short positions put on during this time frame should be  done with the idea that those positions should be covered very quickly  if the uptrending channel remains intact.

 

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