2/22/2006 -- 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.