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.