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Daily Market Comments - March 2006



3/31 - Stock Market Comments

The selling in the Dow was not confirmed with selling in the NASDAQ. The pullback in the Dow now appears to be a relatively slow process. This has become evident with the bullish Harami in Wednesday's trading. At the same time, the NASDAQ has broken above an obvious sideways trading channel. The Dow is mildly pulling back and the NASDAQ is continuing to show strength, indicating sector rotation occurring in the markets versus any major selling. These periods of consolidation provide rest for a slowly uptrending market. The resting stages provide much more health for a bullish market. Continue to stay predominantly long with a few short positions in the portfolio.  

3/30 -- Stock Market Comments

The Dow had indicated a pullback possibility for the past week and a half. The pullback occurred when the Feds raised the expected quarter-point interest rate. Wednesday's bullish trading made it clear that the Bulls had not left the markets. At worst, any pullback was going to be slow, with intermittent buying on the way down. The NASDAQ, showing that it might have fizzled out once again at the top of the trading channel, clearly revealed that the trading channel was now not acting as a deterrent. Continue to hold the long positions that are not showing confirmed sell signals. Short positions need to be monitored with more diligence in view of the fact that the Bears are not yet the dominant influence in this market. Crude oil prices and interest rates do not seem to be creating a major deterrent in investor sentiment. Watch the gold stocks as well as the high-tech and biotech sectors.

3/29 -- Stock Market Comments

The sell signals that were becoming  apparent in the Dow over the past couple of weeks finally took hold with the "surprise?" announcement of another increase in interest rates. The trend line that had been coming up through the  recent tops could have acted as support on a pullback in the Dow. But, as was seen on Tuesday, the selling in the Dow brought prices well below that possible support. The Dow could be supporting at the peak prior to the latest uptrend. At the same time, the NASDAQ failed to break out of its sideways trending channel. The NASDAQ formed a variation of an Evening Star signal at the top of this current channel. Both indexes appear to have the probabilities of moving sideways or down over the next week or so until the stochastics get toward the oversold condition. Be prepared to liquidate the long positions in your portfolio that are showing weakness and add more short positions.

3/28 -- Stock Market Comments

The Dow sold off mildly on Monday, consistent with the sell signals that have formed in the Dow over the past week of trading. The NASDAQ has still shown some mild strength. The combination of these factors reveals that there is no selling of any magnitude in the markets, just a shifting of funds from one sector to another. Crude oil is trading in a flat trading range, bond prices also, and the US dollar appears to be in a choppy range. None of these factors appear to be influencing investor sentiment. The NASDAQ is trying to push through the top end of a trading range that has developed over the past two months. If it breaks out to the upside in the next few days, look for new strength to come into all of the markets. 

3/27 -- Stock Market Comments

The potential weakness in the Dow over the past few days has been greatly moderated by the strength showed in the NASDAQ. The sell signals that were forming in the Dow were occurring when stochastics were starting to roll over. However, the past few days of trading have made the stochastics start to curl up. Continue to stay predominantly long with a few short positions in the portfolio. At this point, the  sellers have not been able to take control. But keep an eye open for  the possibility of a strong selling day. That would indicate it's time  to take some longs off the table.    

3/24 -- Stock Market Comments

The Bullish Engulfing signal of Wednesday in the Dow, which  represented the possibility of seeing a candlestick sell signal soon,  was followed Thursday with a bearish Harami. This would indicate a  strong probability of a pullback in the Dow. Lower futures in the Dow  this morning appear to be confirming that analysis. The NASDAQ on the  other hand appears to be moving sideways, well entrenched in this  sideways trading channel. It didn't show any great weakness on  Thurday. The Russell 2000 actually showed some strength. The scenario  makes the analysis somewhat flat. There may be some selloff in the Dow  and the S&P 500 while some moderate strength remains in the  NASDAQ and the Russell 2000. This is more of an indication of sectors  rotating versus a full-fledged selloff. Be prepared to lighten up on  long positions that are showing signs of weakness, holding the strong  long positions, and having a small number of short positions in the  portfolio. This is not a forceful portfolio stance but right now the  markets are not showing any decisive move one way or the other.

3/23 -- Stock Market Comments

Be careful, Wednesday's signal in the Dow was a Bullish Engulfing  signal in the overbought area. This usually indicates "last gasp"  buying. Continue to hold the long positions but be prepared to see a  candlestick sell signal. Holding a few short positions would not hurt  at this time. At best, the markets could start seeing some rotation  versus a major selloff.  Bond prices are slowly rising, Crude Oil  prices are stable to slightly negative. Currently, there doesn't seem  to be any major influences on the markets other than normal investment  sentiment changes such as profit-taking.   

3/22 -- Stock Market Comments

Tuesday's formation after the previous Doji in the DOW shows that  the sellers are starting to take control. Expect a few days of the  market pulling back, which means to take profits on long positions that  are showing 'toppy' charts.

The NASDAQ also appeared to fail at the top of it's trading channel  with a Bearish Engulfing signal and two Doji signals in the last three  days of trading. Adding a short position or two would be prudent.

3/21 -- Stock Market Comments

On Monday, the  Dow formed a Doji with the stochastics in the overbought area starting  to curl down. This morning's futures reveal weaker trading on the open  this morning. This creates an extremely high probability that the  markets will start pulling back at least for a few days. The first  logical target for the Dow would be the peak level of late February.  The next target would be the 50 day moving average. As mentioned in our  chat sessions, the NASDAQ appears to be in a trading channel. It is  currently trading at the top end of the trading channel and forming  some candlesticks sell signals. In the last three trading days, a  Bearish Engulfing signal has formed followed by two Doji signals. This  is all occurring at the top of the trading channel. A pullback to the  50 day moving average could be very feasible. This scenario would  warrant taking profits on chart patterns that are getting toppy. The  oil sector is a prime example. However, the biotechs continue to show  good strength.

3/20 -- Stock Market Comments

The markets appear to be opening  relatively flat this  morning. Friday's trading did not show anything significant due to the  Triple Witching of options. Currently there is no great market trend in  any of the indexes. The Dow is consistently moving higher which should  be an indication that the uptrends are still intact. This creates an  environment for allowing the candlestick patterns to continue in their  current trends. Expect more movement to the upside.  

3/17 -- Stock Market Comments

It's Triple Witching day, options expirations. The morning futures  do not indicate any dramatic changes in the current market trend. Do  not expect any great market movement today, being a Friday and St.  Patrick's Day.  

3/16 -- Stock Market Comments

We are in a rally. Continue to ride the long positions until the  stochastics get into the overbought condition, which should be in  another day or two. Expect some profit-taking in the near future but,  as of yet, the uptrend is still intact.  

3/15 -- Stock Market Comments

Both the Dow and the NASDAQ displayed much stronger strength than  anticipated. The Dow is now attempting to move to all-time highs. The  last time the Dow moved to all-time highs was in early 2000. The fact  that it closed at a recent high reveals that the Bulls are still in  control of the market and the stochastics indicate there's still more  upside movement to come. The NASDAQ came up through the 50 day moving  average with its strength on Tuesday. Its current uptrend should test  the upper end of the trend channel that has developed since the first  of the year. Continue to hold the long positions until a severe  candlestick sell signal appears in the markets.

3/14 -- Stock Market Comments

The markets did nothing on Monday to change the scenario of a slow  uptrends in progress. Continue to hold the long positions. Any short  positions still being held should be done so very nimbly. Expect the  markets to continue in a very slow uptrend for the near future.

3/13 -- Stock Market Comments

The buying strength seen on Friday was a good confirmation that the  probes toward the 50 day moving average this past week indicated the  lows in the Dow. Now the probabilities indicate that an uptrend should  still be in the works. The recent short positions should be closed upon  seeing strength in today's market. The long positions can continue to  be held. The uptrend in the Dow should be targeting the recent highs of  late February. The uptrend breaking out through that level was showing  a healthy uptrend with backing and filling as the trend moves upwards. 

3/10 -- Stock Market Comments

The weakness in the markets on Thursday indicated that the uptrend  has not started. The NASDAQ looks like it still has more downside  potential, the stochastics are heading down and there has not been any  buy signal to indicate that the downtrend has stopped. The Dow has the  possibility of testing the 50 day moving average one more time before  the stochastics get into oversold conditions. Continue to hold both  long and short positions in the portfolio. 

3/9 -- Stock Market Comments

The Dow appeared to have bounced right off the 50 day moving average  or got very close to it. The NASDAQ showed strength also. At least the  selling should have stopped. Although there may not be any great buying  strength, the uptrend should have a very slow upward movement. This  type of trading environment is conducive to having both long positions  and short positions established in the portfolio.  

3/8 -- Stock Market Comments

The downward trend maintained its direction on Tuesday. Anticipate  further downside movement for the next few days while the indexes test  the 50 day moving averages. Short positions can be added as there are  sectors that are showing severe weakness, the steel stocks and the  mining stocks for example.

3/7 -- Stock Market Comments

The weakness in the  markets is probably because of the rising interest rates. Both the Dow  and the NASDAQ appear to be pulling back to test their 50 day moving  averages. The stochastics appear to need another few days before they  get into the oversold conditions. Expect a few more days of weak  trading in the markets before they become oversold. Although Crude Oil  prices continued to drift lower, interest rates are now becoming more  of a concern. Be prepared to lighten up on the long positions if their  charts are turning over.

 3/6 -- Stock Market Comments

The markets showed  strength on Friday but finally closed at the weaker end of their  trading ranges. This continues the scenario that the current trends in  the indexes will remain relatively slow in movement. The Dow appears to  be moving slowly to the downside and has not shown  any candlestick  signals that would alter that direction, although it did form a large  Doji on Friday. A positive trading day today would indicate the  possibility of a slow uptrend starting to occur. The NASDAQ also had  the possibility of showing strength on Friday. It formed a Shooting  Star formation by the end of the day, giving up all the gains it had  produced during the day. It is also revealing a slow trend channel to  the upside. Under these market conditions, it is still recommended to  continue to hold the long positions. 

3/3 -- Stock Market Comments

The morning futures are weak. The Dow still has the possibility of  moving slowly lower until the stochastics reach the oversold area. The  NASDAQ appears to be opening lower today but any pullback in this index  would probably further indicate that the uptrend will be trading in an  uptrending channel, a day or two of weaker trading should not affect  the slow uptrend. Do not expect any major buying in the markets until  the Dow gets the stochastics to the oversold conditions. That may be  another four or five trading days. Crude Oil prices may have an  additional few days of upside movement. This should put a damper on  bullish equity buying for a few days.

3/2 -- Stock Market Comments

The Dow formed a Bullish Harami indicating that any selling in this  pullback would be very moderate if any at all. The bullish candle that  formed in the NASDAQ also indicated that the uptrend was still intact  but the trajectory of that uptrend would be very slow. However, a slow  steady trend in the markets makes candlestick signals work all that  much more effectively. As long as a severe change does not occur in the  markets, the bullish charts of individual stocks will usually move in a  positive direction for an extended period of time. Continue to hold the  long positions in the sectors that are still performing well. Biotech  stocks and the semiconductor stocks are still moving with good  strength.  

3/1 -- Stock Market Comments

The hard selloff on  Tuesday negated the possibility of a strong breakout from these levels.  Although that may seem to be overstating the obvious, the potential  breakout that had occurred in the NASDAQ chart, a gap up and strong  bullish candle on Monday through the descending trend line, was an  indication that new buying strength had come into the market. The  obvious trend line resistance was not a concern anymore. The 50 day  moving average for both the Dow and the NASDAQ can now be a target for  a pullback. If the uptrend is still intact, that moving average should  act as support. Continue to hold long positions provided that there is  not strong selling in the markets today. The morning futures indicate a  positive open. Witnessing a Bullish Harami in the Dow today would be  more of an indication of the markets moving sideways until the  stochastics get pulled back and get some new outside strength. 

 

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