Daily Market Comments - December 2005
12/30 -- Stock Market Comments
The lack of volume this week clearly illustrates the lack of participants in the markets between Christmas and New Year's. Friday's trading should indicate the same lack of participation. The market should continue in a sideways direction. Continue to rest the mind and body and get prepared for a great 2006. Happy New Year!
12/29 -- Stock Market Comments
The selling of Tuesday was stopped on Wednesday with a Bullish Harami in the indexes. This gave more evidence that the markets will be moving sideways for the next few days. Currently, the 50 day moving average appears to be coming up to intersect with the trading of both the Dow and the NASDAQ. Expect more sideways movement over the next few trading days. Crude Oil prices bounced back up to the moving averages on Wednesday but appear to be acting weaker so far today. A continued drop in energy prices could add more strength to the equity markets, especially right after the first of the year. Continue to hold the long positions that are acting well.
12/28 -- Stock Market Comments
The selling of Tuesday keeps the market trend in a flat trading range. The market sold off on light volume. The positive bias in the market trend was negated. The sideways trading can now be targeted to where the 50 day moving average will intersect with the trading range in the next three or four days of trading. This non-directional movement is not unusual during this week between Christmas and New Year's. Natural Gas prices continued to move toward the 200 day moving average.
12/27 -- Stock Market Comments
It appears as if Christmas sales were relatively decent. Amazon had record-breaking sales. A positive investor confidence that was experienced in the markets before the weekend should continue going into New Year's. Although trading activity may be relatively light, a positive bias in the markets should still be evident. Continue to hold the long positions with the expectation that the markets will move much more dramatically after the first of the year.
12/23 -- Stock Market Comments
Our weekly newsletter will go out today. It will illustrate that the Dow is now forming a potential J Hook pattern. This is occurring as a probable Santa Claus rally is in the making. Having the ability to recognize a high profit pattern using candlestick signals allows an investor to comfortably establish a trading strategy that should maximize profits. Anticipate more buying going into the end of the year. Use a combination of stocks and options to exploit this high potential move.
12/22 -- Stock Market Comments
After some very bullish buying in the Dow and the NASDAQ on Wednesday, the bullish strength started to disappear going in the late afternoon trading. The Dow almost formed a Shooting Star signal which would have given a negative connotation. However, the important word is 'almost'. The Dow closed just above a level that would have been an official Shooting Star signal. As mentioned on Wednesday, the signals are giving the indication that the market will move sideways for the near future. This is good for candlestick investing in that it gives time for the strong chart patterns to work out. Continue to hold the long positions.
12/21 -- Stock Market Comments
Although the Dow sold off on Tuesday, the NASDAQ and the S&P formed Doji signals. This gives the indication that the selling is not very aggressive. Although the pullback is in progress, it should not be a very strong pullback. This provides an opportunity to take to take some profits from stocks that are showing weakness in their charts. Anticipate more of a sideways trading activity until after the Christmas weekend. Today's futures also indicate that the Bulls have not left the market completely. Volume may get much lighter in an already light trading week with the transit strike going on in New York City.
12/20 -- Stock Market Comments
The selling seen in the markets on Monday confirmed the indecisive signals, the Shooting Star/Doji signals that formed in the Dow last Thursday and Friday. Weakness had already been witnessed in the other indexes, indicating that some selling had been occurring. Most of the indexes pulled back to the bottom of their trading ranges of the past few weeks. A positive trading day today, after the economic numbers, would signify that the markets will be trading sideways for the next week or so. Crude Oil prices continued to get weaker. This should start adding some strength to the equity markets. We would be taking some profits on chart patterns that are showing sell signals.
12/19 -- Stock Market Comments
Both the Dow and the NASDAQ rested on Thursday and Friday. As can be seen in the charts, trading has moved sideways for the past three weeks. Do not expect too much movement this week before Christmas. A flat trading period going into the holidays is a set-up for a big movement in the markets after the holidays. That will be the time to watch for candlestick signals to illustrate which direction investor sentiment wants to push the market.
12/16 -- Stock Market Comments
The Dow and the NASDAQ rested on Thursday. The indexes indicated that the sellers had not entered the markets. However, the S&P 500 and the Russell 2000 showed definite signs of selling. The markets need to stay up strong today to indicate that Thursday was just a resting day in the markets. Continue to hold the long positions.
12/15 -- Stock Market Comments
On Wednesday the Dow showed strength while the NASDAQ rested. Nothing has changed from the previous scenario, the trend is still upwards. Continue to hold a good long positions. Crude Oil prices and Natural Gas prices showed strong reversal signals on Wednesday. Natural Gas prices have formed an Abandoned Baby signal at the top. Look for lower Natural Gas prices over the next few days. This should add some strength to the equity markets.
12/14 -- Stock Market Comments
Raising the interest rates another quarter of a point was looked upon favorably by the markets. The Dow is now in the process of creating a J Hook pattern itself. Anticipate more upside movement in this market. Stochastics are starting to curl back up. A breakdown in Crude Oil prices and Natural Gas prices would be good stimulus. Continue to hold the long positions.
12/13 -- Stock Market Comments
Monday's trading activity indicated no great selling pressure. After the strong run-up in the markets over the past month, the past week has just been sideways consolidation. This is giving the stochastics an opportunity to pull back and gather new strength. The uptrend appears to still be intact. Continue to hold the long positions. The gaming stocks and the medical supply stocks are two sectors that are picking up strength.
12/12 -- Stock Market Comments
Nothing has changed in the bullish sentiment. After a few days of consolidation last week, the buyers demonstrated that they have not left the markets. As described in this weekend's newsletter, the evidence that the consolidation was more likely a profit-taking pullback versus a full-scale reversal was produced by the NASDAQ, the S&P 500, and the Russell 2000. Continue to hold the long positions. Having a short position or two in the portfolio is also advisable.
12/9 -- Stock Market Comments
The selling on Thursday in the Dow breached the low levels of last week. This would indicate that there will be weakness in the markets until the stochastics get into the oversold area, in approximately three or four more days. However, the S&P 500 and the Russell 2000 indexes both showed Spinning Top days. This indecision illustrates that, although the markets are pulling back, not all sectors are participating. Continue to hold the long positions that are acting well during this pullback. We have also recommended adding a short position or two to the portfolio on a short-term basis.
12/8 -- Stock Market Comments
The buying on Wednesday during the last half hour of trading brought the Dow prices back up to where they closed above the lows of about a week ago. This was the only saving grace to indicate that the sellers were not starting to come into the market with some force. Closing above that level indicates that the markets may move more in a sideways pattern than in a downward trend. There are still a good number of charts that are acting very well during this consolidation stage. Continue to hold the long positions that are acting well. Adding a short position or two in this market climate would be prudent.
12/7 -- Stock Market Comments
The Dow formed a Shooting Star signal on Tuesday, as well as the NASDAQ. This causes a little concern. The markets have been acting toppy for the past week or so. The strong buying on Tuesday would have negated any of the toppy sentiment had the buying continued into the close. The fact that the Shooting Star signals appeared, from Tuesday's late trading the sell-off, makes the upward trend much more suspect at this time. Bearish sentiment today would be the indication that the sellers are starting to take control of the trend. Be prepared to take some profits on weakness today.
12/6 -- Stock Market Comments
The weakness in the Dow and the NASDAQ gave rise to the idea that there may be a few days of pullback action at these levels. An obvious change of investor sentiment should be anticipated if the Dow closes below the low of last Wednesday and Thursday, at approximately the 10,800 level. This morning's futures, being relatively strong, gives the indication that the sellers havn't come into this market with any great force yet. Until there becomes a very strong selling indication, the uptrend in this market should continue. As of now, there hasn't been a bad reversal signal that would show a significant change in the bullish sentiment in the markets.
12/5 -- Stock Market Comments
Although the Dow backed off on Friday, the NASDAQ continued to show strength. This indicates that the uptrend is still in progress. As of yet, there have not been any indications that investor sentiment has changed. Continue to hold the long positions. Both the Dow and the NASDAQ are in the process of forming J Hook patterns. Continued strength this week would reveal the potential of the uptrend in the markets continuing right through the end of the year.
12/2 -- Stock Market Comments
The markets had full opportunity to sell off on Thursday but as we saw, the Bulls stepped right back in with much more than mild enthusiasm. The mild pullbacks followed by the continued uptrend makes this uptrend very healthy. The extended uptrend is creating the opportunity to utilize the well-defined candlestick patterns such as the J Hook and the Fry Pan Bottom. Continue to hold lthe ong positions until a severe sell signal becomes evident in this market.
12/1 -- Stock Market Comments
The pullback in the DOW on Wednesday was not confirmed by any selling in the NASDAQ. This is still an indication that we are in a profit-taking period versus a reversal in the markets. Continue to hold your long positions but be nimble. Today we definately need to see some sort of positive close to indicate that the sellers are not taking over.