Daily Market Comments - February 2006
2/28 -- Stock Market Comments
The Doji that formed on Friday in the Dow provided an opportunity for the sellers to take control of the market. Monday showed that the sellers were not in the markets. The NASDAQ closed right on a descending trend line on Friday. If it had failed that level, the obvious assumption would be that the trend line was once again acting as resistance. However, Monday's trading in the NASDAQ showed a gap up through the trend line and continued with a bullish candle. This demonstrated that the trend line was now not a factor in the uptrend. A new buying dynamic has come into the market. On any pullbacks in the NASDAQ, look for the trend line to act as support for the uptrend. Crude Oil prices and Natural Gas prices have not shown any strength. Although the prices bounced last week, the candlestick formations reveal that the buying was not strong. Lower energy prices could be the catalyst for the next leg up in this market. Continue to hold the long positions.
2/27 - Stock Market Comments
The market showed some healthy consolidation on Friday. In the face of some doubtful news going into the weekend, the Dow came back up to the top end of the trading range and the NASDAQ closed positive. This gave an indication that major selling had not come into the market yet. Although Crude Oil prices bounced on Friday, they are showing continued weakness today. Investor sentiment is still mildly bullish. This is in an investment environment that makes the strong sectors perform that much better. As long as the market trend continues flat or positive, investor sentiment in the current strong sectors will continue to get stronger. Continue to hold the long positions.
2/24 -- Stock Market Comments
Earlier this week, the Dow experienced an Evening Star signal. This represented some potential selling coming into the markets. Wednesday showed another bullish day which either negated the Evening Star signal or became the Bullish Engulfing signal at the top. Remember, a Bullish Engulfing signal witnessed in overbought conditions means it is time to start watching for a candlestick sell signal. Thursday's Bearish Harami now puts more credence on the Evening Star signal. This is creating some evidence that the sellers may be stepping up a little at these levels. Today's agitations in the oil markets could keep the buyers from stepping up aggressively. Although the Dow is getting a little toppy, the NASDAQ seems to be holding up well. This produces the evaluation that there might be some money shifting from one sector to the next for the near term. Look to take profits in the sectors that are starting to show weakness. Adding a short position or two to the portfolio may be prudent.
2/23 -- Stock Market Comments
What could have possibly been an Evening Star signal that formed on Tuesday was negated by the positive trading on Wednesday. The uptrend should continue as buying was seen in all of the indexes. However, with the markets being in the overbought condition, and the appearance of an Evening Star signal in the Dow, investors should watch for any other sell signals appearing over the next few days. Confirmation of the uptrend will require some non-sell signals. Crude Oil prices continued to show weakness. This could be a catalyst for equities to move higher. Continue to stay long but be more diligent in watching for additional sell signals.
2/22 -- Stock Market Comments
Both the Dow and the S&P 500 formed Evening Star signals on Tuesday in the overbought conditions. The NASDAQ sold off, making the downward trading channel much more obvious. Expect some continued selling today. The magnitude of the selling will illustrate whether a pullback is in the making. A strong selling day today would reveal a pullback, whereas a Doji or Hammer-type day would indicate just a pause in the current uptrend. On Tuesday, Crude Oil prices gapped up in the morning but did not show any strength after it opened. Any weakness in Crude Oil prices today could indicate that the short-term bounce is over. Until a severe sell signal is obvious in the general market indexes, continue to hold the long positions and take profits on positions that are starting to roll over.
2/21 -- Stock Market Comments
The markets consolidated on Friday but did nothing more than show mild profit-taking. Crude Oil prices did the anticipated bounce but did not phase investor sentiment. Although some of the indexes formed potential sell signals, the stochastics are in a strong upward direction. This would require that the sell signals witness confirmed selling to mean anything of significance. However, this morning's futures reveal that the buyers are still in control. Continue to hold the long positions. Oils and mining are strong sectors.
2/17 -- Stock Market Comments
The continued strength in the markets is still a function of a Spreading pattern seen in the Dow chart. There is a high probability that we will be in a strong uptrend for the next few weeks. The other indexes, although not showing any strong patterns, have been trading sideways for the past two months. A breakout to the upside of that trading range in the near future would confirm the buying sentiment that has come back into the market. Crude Oil prices appear to be taking a bounce to the upside today as indicated by the Bullish Harami in the Crude Oil chart on Thursday. However, a bounce in price at these levels should not create negative investor sentiment. A short-term bounce should not cause the equity markets to react negatively. Continue to hold the long positions.
2/16 -- Stock Market Comments
The market had a very good opportunity to consolidate on Wednesday after the strong day on Tuesday. However, it finished the day with relatively good strength. Crude Oil prices dropped dramatically again in its downtrend Wednesday. The new Federal Reserve Chairman seemed well accepted and what he said could be well understood. Hewlett-Packard's earnings beat expectations. The Dow is coming out of a Spreading formation. It closed at a recent high Wednesday. This all leads to the possibility, as a Spreading formation indicates, that a strong rally might be in the making. Continue to hold the long positions.
2/15 -- Stock Market Comments
We had a nice surprise for Valentine's Day. Although only a slow uptrend was anticipated, Tuesday's trading showed that the Bulls were ready to buy on any size of good news. The Dow has closed very close to its recent highs. The NASDAQ is not showing any great trend other than the fact that the trendline that acted as resistance during December now appears to be acting as support in January and February. Continue to hold the long positions. The biotechs are still acting relatively strong. Crude Oil and Natural Gas prices continued to move in a downward direction.
2/14 -- Stock Market Comments
Happy Valentine's Day! The markets are now in a sideways trend, with no direction. The NASDAQ and QQQQ are right on previous recent lows, with stochastics in the oversold area. Anticipate a slight positive movement from this area, but not with any great magnitude.Crude Oil is still heading lower. That could soon be the support for the equity markets. Continue to stay long in the strong sectors.
2/13 -- Stock Market Comments
The up and down movements of the market's indexes over a few days while the stochastics have moved into the oversold area indicate that a bottom may be forming. The NASDAQ appears to have supported at the recent bottom of mid-January. The Dow continues to show decent strength. Continue to hold the long positions.
2/10 -- Stock Market Comments
The early strength seen in Thursday's trading disappeared by the closing bell. Although the Dow closed up slightly, the other indexes revealed weakness. This gives indications that the markets do not have a direction and will move in a sideways manner in the near future. The Dow chart is clearly showing a slow bottoming action. This may be in effect for the next few weeks. Crude Oil prices and Natural Gas prices are still dropping but are now well into the oversold conditions. Fortunately, there are still sectors in the markets that are acting very well on the long side. Continue to hold the long positions that have not shown weakness. There is still a good amount of bullish interest in this market.
2/9 -- Stock Market Comments
The Bullish Engulfing signal in the Dow was a clear indication that the selling had stopped. The downtrend in the Dow started with a non-candlestick sell signal, which was an indication of the pullback not being very severe. The Bullish Engulfing signal on Wednesday was a good signal that the uptrend will now continue with some decent force. Continue to hold the long positions. Crude Oil prices and Natural Gas prices appear to be heading lower, which should give some more strength to the equity markets.
2/8 -- Stock Market Comments
The NASDAQ, as well as the QQQQ, are both on a major support level. The stochastics are not quite into the oversold area yet. The Dow had the opportunity to show some strength after the Doji from the prior day but sold off late in the afternoon. This morning's futures are showing a positive open. Currently, the markets are all trading in a sideways trading range. The current downtrend may continue for a few more days until the stochastics can all reach the oversold area. Crude Oil and Natural Gas prices continued to drop hard on Tuesday. By this time, the toppy positions should have been stopped out.
2/7 -- Stock Market Comments
On Monday the Dow formed a Doji/Harami. This could be an indication that the selling has stopped. All of the other indexes revealed indecisive trading signals. Look for buying confirmation over the next couple of days to indicate that the pullback is over and the uptrend is continuing. Crude Oil prices and Natural Gas prices continue to show weakness. The Crude Oil chart illustrates a Double Top over the past few weeks. More weakness in the energy area should add strength to the equity markets.
2/6 -- Stock Market Comments
Friday continued the selling that started on Thursday. However, none of the indexes experienced a candlestick sell signal. This should give the implication that the sell-off may not have any extensive force behind it. As can be witnessed, the Dow is creating a trading channel that is moving sideways. There is not any massive selling in the markets. This can be analyzed by the fact that there are numerous stocks/sectors still moving in a positive direction. Continue to hold the strong positions.
2/3 -- Stock Market Comments
Thursday's selling came from a rumor that a new security alert was going to be put into effect. However, when that rumor was denied, the buyers did not come back into the market. Although the markets are selling off, there have not been candlestick sell signals. This would imply that a selloff should be short-lived. The Dow closed right on the 50 day moving average Thursday. Watch for an indecisive trading day in the markets today. If so, it would suggest that the selling is over and the markets should start moving back up next week. Continue to hold the long positions.
2/2 -- Stock Market Comments
On Wednesday it became apparent that the 50 day moving average was going to act as support in the Dow. Once the Dow touched the 50 day moving average, the buyers started coming in. The other indexes have all shown good strength also. Crude Oil prices showed weakness after the Bearish Harami. Weakness in the energy area should add strength to the equity markets. The Dow has formed a Spreading pattern. This current uptrend should be held until a severe sell signal appears, which might be a few weeks away.
2/1 -- Stock Market Comments
Where did January go? The indexes consolidated with the greatest consolidation occurring in the DOW. The NASDAQ, S&P 500, and the Russell 2000 did not show any severe consolidation. That should make for some healthy backing and filling in a strong uptrend. The expected news from the Feds should not be any great deterrent on the future outlook of equities. This morning's futures are showing a positive bias even after GOOG missed their earnings. Continue to hold the long positions.