Daily Market Comments - June 2006
6/30 -- Stock Market Comments
The quarter-point rate height was apparently what the market wanted to see. The negative investor sentiment that had overhung the market for the last few weeks disappeared completely with that announcement. The Dow moved from the 200 day moving average back up to the 50 day moving average. Trading above that level will negate the 50 day moving average acting as resistance. Look for investor sentiment to continue to be positive in the markets in the near term.
6/29 -- Stock Market Comments
The Fed announcement today should have the markets in a "wait and see" mode. There still should be some sectors that move well despite what the Feds do, such as the oils. We would not do anything aggressive today until after the announcement.
6/28 -- Stock Market Comments
The selling of Tuesday broke down through the potential trend channel that was developing. The evaluation of a slow uptrend, based upon that trend channel, has now been negated. Look for continued selling over the next few days. Short the weak sectors. The major airline industry is rolling over. Tech stocks also are showing weakness. Long positions that are not showing any strength should be closed out. The markets should head lower until something dramatic changes investor sentiment.
6/27 -- Stock Market Comments
The buying on Monday provided more chart evidence that the market is in a sideways movement. However, there are sectors acting strong, home builders, mining, and oil service companies. This is still a market environment to stay long in the strong sectors and have a few short positions in the portfolio.
6/26 -- Stock Market Comments
The lack of strength in the markets late Friday afternoon provided some more evidence of weakness or sideways movement. Neither the Dow nor the NASDAQ are indicating any directional movement. This now provides an environment for keeping both long positions and short position established in the portfolio.
6/23 -- Stock Market Comments
The markets had an opportunity to show more strength on Thursday. All the indexes formed Bearish Harami signals. This indicates that there is not a strong bullish force in this market yet. This morning's weakness continues to show that evidence. This market now may be in a sideways mode. Close out the long positions that are showing weakness and add a few short positions to the portfolio.
6/22 -- Stock Market Comments
The strength in the markets on Wednesday was a result of the reversal signals at the bottom of the downtrend last week. Notice that after the Bullish Engulfing signal formed in the Dow, the strong up-move resisted slightly at the 20 day moving average. This illustrated normal consolidation after the strong initial move. The NASDAQ also showed consolidation after its initial up-move. It did not close above the close of the last large bullish candle. That would have created a Three Methods Rising signal. A strong move today in the NASDAQ would bring it up through the 20 day moving average, a possible resistance level. Continue to hold long positions. The mining stocks are starting to show good strength again.
6/21 -- Stock Market Comments
The Dow formed a Bullish Harami on Tuesday. The NASDAQ formed an Inverted Hammer signal right on the 500 day moving average. The stochastics in both indexes are starting to move in a positive direction. The current candlestick signals show indications of more upside movement. That needs to be confirmed today with a positive trading day in both indexes. Continue to hold long positions but be nimble. A weak close today would demonstrate a lack of strength in this bounce to the upside. That would warrant coming back out of the long positions.
6/20 -- Stock Market Comments
The consolidation of the markets on Monday makes today a very important trading day. The NASDAQ pulled all the way back to the 500 day moving average. The Dow's pullback was not quite halfway down the previous candle. Any weakness in the markets today would indicate that the last rally was a bounce in a downtrending market. The indexes need to close on a positive note today to indicate that the consolidation is over and that the uptrend is still intact. If the market closes weak today, any new long positions put on within the last few days should be closed if they have not shown any strength. The housing market report this morning has added a little bit of strength to the morning futures.
6/19 -- Stock Market Comments
The consolidation on Friday was not unexpected. The strong move of Thursday was likely to see some profit-taking. This morning the futures are looking strong. This would confirm the probabilities that the reversal pattern of last week should continue into this week. Anticipate at least a day or two more to the upside. This bounce/uptrend needs to be watched closely for the next few days. The uptrend should be in progress but one more pullback may occur before a strong move can be anticipated. For now, hold the long positions but be prepared to take some quick profits if the market starts to fizzle in a day or two.
6/16 -- Stock Market Comments
With the strength of the markets on Thursday, it will not be unusual to see a day of consolidation, especially on a Friday and an option expiration day. The morning futures being weak indicate profit-taking on the open. Anticipate a Doji-type day. On a pullback, the stocks in the strong sectors, such as metals and mining and oil, can be bought.
6/15 -- Stock Market Comments
With the indexes in the oversold area on Wednesday, the buy signals started to appear. The foreign markets have picked up strength also. Anticipate at least a couple of days of bullish movement. There could be a bounce with another pullback, but for the short term, anticipate indexes coming back up and testing the 20 day moving average. Cover the short positions.
6/14 -- Stock Market Comments
The final selling in the market on Tuesday came within the last 15 minutes of trading. Prior to that, both the Dow and the NASDAQ appeared to be forming Spinning Tops. The bottom should be getting close but there is still not the blood in the streets that would indicate the final capitulation. Continue to hold the short positions.
6/13 -- Stock Market Comments
The Dow is now in the oversold condition but there has not been any indication that the buyers are stepping in. The other indexes, the NASDAQ, the S&P 500, and the Russell 2000 still indicate but there is some more downside potential before this market can turn back up. Anticipate a few more days of negative/choppy markets in this area. The short positions should be performing very well. The long positions that showed sell signals in the past week should have been closed out by this time. Continue to hold short positions until this market reveals a definite reversal signal. Crude oil prices continue to move lower. Interest rates are moving lower. At some point this will be the catalyst for investors to come back into the equity markets.
6/12 -- Stock Market Comments
The selling on Friday afternoon negated the potential reversal of the large Hammer/Doji signal of Thursday. The Dow came back down right to the 200 day moving average. The other indexes sold off also. The stochastics in each index had the opportunity to start curling up, had Friday been a positive trading day. The lack of buying indicates that the bottom of this downtrend has not been reached yet. Anticipate a few more days of sloppy/downside trading in these markets. The Dow is the only index showing a potential support area on the 200 day moving average. Keep a mixture of short positions in the portfolio with long positions being slowly added.
6/9 -- Stock Market Comments
The Blue Ice Failure pattern was confirmed Thursday with a hard push down through the 200 day moving average in the Dow. The Hammer signal forming in all the indexes indicate at least a short-term bottom. Look for a bounce over the next couple of days. However, the stochastics in the NASDAQ reveal that there could be some more downside movement. The bounce should be considered a short-term trade potential. Stay long until there is evidence, candlestick sell signals, that the bounce is over.
6/8 -- Stock Market Comments
The stochastics are heading down after a candlestick sell signal, the early morning buying on Wednesday had a high probability that it would disappear by the afternoon. The 200 day moving average in the Dow is too close of a target for it not to at least touch it. The NASDAQ currently does not have any lower target. It will probably start supporting when the Dow starts showing support. The bottom should be relatively close, interest rates are dropping and crude oil prices are dropping. This eventually will create investor enthusiasm. Continue to hold the short positions. The steel stocks and mining stocks remain weak.
6/7 -- Stock Market Comments
The downtrend continued on Tuesday as indicated from the failure at the 50 day moving average two trading days ago. The stochastics have turned back down. The 200 day moving average still remains a viable target. Other pressures of the markets are starting to ease. Crude oil prices continue to drift lower and interest rates are stabilizing. This may be the prelude to a relatively sideways market going into the summertime. The advantage of that type of market is that there will be sectors moving up while other sectors are moving down. The candlestick signals become that much more beneficial for identifying each of those sectors.
Expect some early buying this morning with the possibility of a selloff in the afternoon.
6/6 -- Stock Market Comments
The Dow failed the 50 day moving average for the second time in the past two weeks. It formed an Evening Star signal on Monday. The difference between this time and last week is that the NASDAQ failed the 200 day moving average at the same time. The hard selling every time the indexes reach these moving averages is an indication the investor sentiment is not very bullish, or else we would see some buying pushing these averages up through obvious technical levels. Look for a few more days of bearish movement. The Dow should pull back to test the 200 day moving average. This would imply that we are in for a few days to the downside.
6/5 -- Stock Market Comments
On Friday, the NASDAQ opened on the 200 day moving average and consolidated down from there, the Dow formed a Doji as it was testing the 50 day moving average. Both indexes have their stochastics moving in a positive direction. Expect some further consolidation at these moving average levels but then expect some more upside movement in the trend. Until the indexes break out through these moving averages, it would be suggested to have the majority of the portfolio in long positions with a few short positions. Crude oil prices are acting strong this morning. This should be a deterrent for any great positive movement in the equity markets today.
6/2 -- Stock Market Comments
The Bullish Harami signals in the NASDAQ and the S&P 500 were confirmed on Thursday. The Dow approached the 50 day moving average for the second time. A rule of thumb is when a price approaches a moving average for the first time, it will usually fail. If the price comes back up to test the moving average a second time, it will usually breach that moving average. This morning's futures indicate enough strength for the Dow to get through the 50 day moving average. The NASDAQ should be able to come up through the 200 day moving average. Expect some early morning strength in the markets but don't be surprised to see some consolidation by the end of the day, being a Friday afternoon. Overall, the uptrend is still the predominant feature.
6/1 -- Stock Market Comments
There was a potential of a Blue Ice Failure forming in the Dow. However, the bullish trading on Wednesday clearly revealed that the selling was not going to be excessive. The NASDAQ formed a Bullish Harami, which would indicate that the short-term selling had stopped. This now puts the markets into an indecisive trading pattern. Until there is a definite trend one way or the other, it would be prudent to have some long positions and some short positions in the portfolio. Crude oil prices appear to be moving lower once again, in a descending trading channel. Relief from the Iranian situation could be another stimulus for the next uptrend.