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Daily Market Comments - November 2005


11/30 -- Stock Market Comments

The weakness in the markets at the end of the trading day Tuesday provides a clear  message. The markets have finally gotten into an area where the Bulls and the Bears are finding equilibrium. The Dow formed a Shooting Star signal Tuesday with stochastics in the overbought condition. Although the NASDAQ opened higher, it closed lower creating another dark candle. This weakness after an extended uptrend produces a situation that can be analyzed relatively easily with candlestick signals. A pullback should be expected. How the candlestick formations develop during the pullback will be important. Indecisive signals, such as Spinning Tops, Hammers, and Doji signals, will indicate that the selling is occurring with some apprehension. As of yet, there has not been any indication that the selling has any great force behind it. Continue to hold your long positions but be prepared to take some profits if the markets starts selling off hard.

11/29 -- Stock Market Comments

Monday's selling was indicative of the profit-taking that should have been expected after the strong rally we've seen since mid-October . The Doji day in the NASDAQ from Friday gave an indication that there might be some indecision. However, a full-scale reversal in the market trends requires confirmation that the sellers are in control. The longer a trend stays in existence, the more convincing the reversal signal needs to be to demonstrate that the psychology of the previous trend has been reversed. The positive indication of the futures this morning provide more of an indication that Monday's selling was profit-taking in an uptrend. Continue to trade with the upward trend until a definite sell signal becomes apparent.

11/28 -- Stock Market Comments

Both Wednesday and Friday showed no signs of selling. Although Friday showed a Doji in the NASDAQ, and the Dow showed a potential Shooting Star, the uptrend requires a very strong candlestick reversal signal to show a change in investor sentiment. The longer a trend  persists, the more definite a reversal signal needs to be to show at the trend has come to an end. The Thanksgiving weekend shopping indications were stronger than anticipated. This information should not change the prevailing bullish sentiment in the markets. Additionally, Crude Oil prices and Natural Gas prices continue to show weakness. Continue to hold the long positions.

11/23 -- Stock Market Comments

Nothing has changed the uptrend. There still will be a day or two of profit-taking sometime in the near future, but as of now, the uptrend is intact. Continue to hold your long positions. Today's trading should come to a standstill after lunch. Friday's trading, which is usually a half day of trading, should be relatively quiet. Enjoy the rally and enjoy Thanksgiving.

11/22 -- Stock Market Comments

Once again, the buying came into the markets in the final half hour of the trading day. This indicates a relatively healthy market trend,  the profit-taking occurring as the uptrend is in progress. The Dow has had three relatively strong trading days in a row. Do not be surprised to see some consolidation for a day or two. Continue to hold the long positions that are maintaining strong chart patterns. We would expect the markets to be relatively quiet this week.

11/21 -- Stock Market Comments

Friday afternoon the Dow was only up a couple of points with less than 30 minutes left to trade. The final 30 minutes showed some decisive buying. What could have been a Shooting Star/Doji in the Dow turned into a positive candle on the close. As of now, the uptrend has not shown any selling pressure.. Although the stochastics indicate overbought conditions, the uptrend is still intact.

Continue to watch Natural Gas prices and Crude Oil prices, their  steady downtrend should continue to add strength to the  markets. Short-term bounces in energy prices will probably correlate  with profit-taking pullbacks in the equity markets.

11/18 -- Stock Market Comments

The indecision was now made into a decision, the Bulls step right  back in and took the markets to new highs, breaching the resistance  levels.  This should give an indication of further upside movement.   Instead of the markets showing possible reversals in the past few days,  they have now indicated consolidation during an uptrend.  These periods  of consolidation make the uptrend that much healthier.  Be prepared to  cover short positions that will be showing strength today.  Both crude  oil and natural gas prices had the opportunity to bounce up yesterday.   However, the initial buying disappeared as the sellers came back into  the energy markets before the end of the day.

Look for more upside in the equity markets

11/17 -- Stock Market Comments

The Dow formed another doji while the NASDAQ formed a hammer type  signal. This gives the indication that although there is selling going  on in the market, it is doing so in a very indecisive manner.  The Dow  appears to have run out of steam right at a major resistance level,  10,700.  Two scenarios need to be watched.  If in the next couple days  the selling creates indecisive signals, that would be telling us that  the selling is merely profit taking versus a full-fledged reversal.  If  the selling appears to be minor, then anticipate that when the Bulls  gain their confidence again, a strong bullish day will be seen taking  the Dow up through the 10,700 level.  A strong day to the downside  would then make a pullback to the moving averages the most likely  scenario.

Crude oil prices may be bouncing up slightly but should be testing  the 200 moving average area.  Gold prices appear to be breaking out of  their recent trading area.  Gold stocks should continue their uptrend.

11/16 -- Stock Market Comments

The Dow formed a doji at the same level that it peaked out in early  September. The NASDAQ sold off after a spinning top that formed on  Monday. The weakness at these levels, with the stochastics in the  overbought conditions, favor a pullback. Be prepared to take profits  upon seeing further weakness in the markets today.  Adding some short  positions to the portfolio would be beneficial in these market  conditions.  Both the Dow and the NASDAQ require a very strong bullish  candle today to take these markets up through the perceived resistance  levels.

Crude oil and natural gas prices continue to drift lower.  This  weakness in the energy area should be the catalyst for maintaining  strength in the equity markets.  Although a pullback is expected, it  should be short-lived.

11/15 -- Stock Market Comments

Both the Dow in the NASDAQ are at very critical trading levels.   Yesterday the Dow formed a spinning top right at the level that it  failed in early September.  The NASDAQ is showing indecisive signals at  where it peaked in early August. The market in general is in the  overbought condition. A failure at these levels would indicate a  pullback potentially to the moving averages.  On the other hand, a  strong move out of these levels would indicate that the year end rally  was still in effect. Neither crude oil or natural gas are showing any  great bullish strength.  Their steady decline should be adding some  positive investor sentiment to the equity markets.

Be prepared to start taking some profits if the markets close on the weak side today.

11/14 - Stock Market Comments

 Friday continued to show bullish activity in the markets.   The  uptrend is still in progress.   Stochastics are in the overbought area,  but could remain there for weeks   if the uptrend persists. So far, the  markets have not given any indication that the uptrend is over.    Continue to hold long positions that have been acting well in this  market, not showing any signs of weakness.   It would be prudent to  hold a few short positions in the portfolio.   There are sectors that  have run out of steam and may be pulling back.  

Crude oil and natural gas prices could take a small technical bounce from what the candlestick signals are indicating.  

11/04 - Stock Market Comments

Both the Dow and the NASDAQ traded above the descending trend line  that had become obvious over the last few months. The NASDAQ formed a  Spinning Top while the Dow formed  a bullish candle above the trend  line. Although the stochastics are now moving toward the overbought  condition, the trading above that trendl ine may indicate new investor  sentiment. Continue to hold long positions.   

11/03 - Stock Market Comments

On Wednesday both the DOW and the NASDAQ closed right on a very  important descending trend line. Today will be critical in that if  prices fail and breach that trend line, the Dumpling Top that has  formed in the DOW over the past six months will still be in effect. If  prices breach the trend line to the upside, a whole new dynamic will  have come into the market. It may be the start of a good strong rally.

Crude Oil prices and Natural Gas prices continue to show weakness. A  breakdown in the energy area could be the catalyst for the strong rally.

11/02 - Stock Market Comments

On Tuesday a  Bearish Harami formed in the Dow, right on the 50 day moving average.  This demonstrates that the buying has stopped. That is being confirmed  with weaker futures this morning. The same type of pattern occurred in  the NASDAQ. Both indexes seem to be losing strength near the descending  trend line that is coming down through the recent tops. A failure to  breach that trend line will be adding to bigger chart patterns on the  longer-term charts. 

Over the past six months, the Dow has been  forming a Dumpling Top pattern, a slow curving top. This indicates that  investor sentiment is turning negative. A pullback from these levels  would add confirmation to that pattern to that pattern.

Be prepared to start reducing the long exposure to the markets if  the descending trend line is not breached in the next few trading days.

11/1 - Stock Market Comments

The Dow moved  up through the 50 day moving average Monday and almost touched the 200  day moving average. It pulled back, and closed very close to the 50 day  moving average. The NASDAQ closed just slightly above the 50 day moving  average. Both indexes have a descending trendline coming down  through the tops of the previous few months. Watch for those levels to  be tested. If they fail, the Dumpling Top formation that has appeared  in the Dow in the last six months of trading needs to be addressed. 

The  descending trendline needs to be breached fairly soon or investor  sentiment may start to become negative again. Crude Oil prices and  Natural Gas prices should continue to the downside. This could be the  catalyst for the next market rally.

 

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