Daily Market Comments - August 2006
8/31 - Stock Market Comments
The J-Hook formation is still evident in both the Dow and the NASDAQ. The Dow is currently trading at the peak of two weeks ago. A close above that level today would be a very bullish factor. The buying over the past couple of days has been very slow and steady. Continue to hold long positions until there is a severe sell signal in this trend. The 200 day moving average remains the logical target for the NASDAQ. This still implies a few more days to the upside.
8/30 - Stock Market Comments
The buying came back into the markets on Tuesday after the Fed notes were released. The bullish close continued the uptrend bias. Interest rates continue to move lower, crude oil prices have pulled back to the $70 area. Currently there does not seem to be anything that is producing a huge negative sentiment in the markets. The uptrend that started a couple of weeks ago still has the potential of hitting some upside targets. The 200 day moving average should be the next target for the NASDAQ. The NASDAQ is in the process of forming a J-Hook pattern. The Dow is trying to form the same. Anticipate a few more days to the upside. Continue to hold long positions.
8/29 - Stock Market Comments
The indecision of last week's pullback was providing an opportunity for this trend to be confirmed either to the downside or the upside. Monday's trading illustrated that the Bulls had finally stepped back in to continue the uptrend. The NASDAQ now has an opportunity to move up to the 200 day moving average. This would imply at least a few more days of positive trading. This morning's futures, although not really strong, are still revealing the bullish sentiment in the markets. Positions should be biased toward the long side for the next few days.
8/28 - Stock Market Comments
The Dow closed slightly lower while the NASDAQ closed slightly higher on Friday. The indecisive trading in both indexes continues to illustrate that the recent pullback does not demonstrate any decisive selling pressure. The pullback is giving more of an indication of profit-taking in an uptrend versus a major reversal. It also implies that there is nothing to stimulate any buying in this market nor is there any reason to sell in this market. The sideways activity should continue until something dramatically changes investor sentiment, either positive or negative. Continue to hold long positions and the short positions that are showing good chart patterns. The sideways trading movement should persist until something stimulates buying or selling, which may not occur for the next few days.
8/25 - Stock Market Comments
The direction of the markets is still in question. Thursday's Doji in the Dow and the Hammer in the NASDAQ illustrated that the selling pressure was not of any great consequence. The pullback in both indexes has occurred with very indecisive trading. The rule of thumb is that a trend will usually move in the direction of how the prices open the following day. Currently, this morning's futures are trading too flat to give an indication of which direction the the markets will open. This means the market trend is going to be determined by how the trading occurs during the day. This is not as much of a forecast analysis as it is a suggestion to be prepared to open or close positions based on the trading after Thursdays Doji in the Dow. The scenario at this point is obvious. Further weakness in the trend today makes the 20 day moving average the downward potential target. If there is buying strength in the markets today, it would indicate that the past four trading days were profit-taking in an uptrend.
8/24 - Stock Market Comments
The selling in Wednesday's markets started to confirm the indecisive signals that were witnessed in both indexes over the past few days. Although the morning futures are showing positive movement, it is apparent that the Housing stocks will have an important effect on today's trading. If the market starts selling off after that report, anticipate more downside movement in this market. The short positions should be added at that time. Interest rates and crude oil prices have now taken a back seat to the major economic indicators. The indication that the economy is slowing down isn't alleviating the possibility of Fed rate increases but it should soon be realized that the economy is slowing down.
8/23 - Stock Market Comments
The futures are illustrating another flat open today. After the Doji seen in the Dow on Tuesday, how they start trading this market early today should give an indication of which direction the trend should go. As in Monday's trading, the selling did not illustrate any severe selling pressure. The past two days of trading appeared to be profit-taking. Today's trading action will provide evidence that we are at a short-term top if the sellers start taking control, or we have just gone through a couple of days of profit-taking if the Bulls make themselves known. This analysis does not provide future trend direction, it merely allows investors to react in the appropriate manner. Continue to hold long positions that are producing good chart patterns.
8/22 - Stock Market Comments
The expected consolidation occurred in both indexes on Monday. However, that consolidation did not show any great conviction to the down side. Expect another day of consolidation. An indecisive trading day would illustrate that the consolidation will be mild during the current uptrending market. The premarket futures reveal a relatively flat open. The fact that we are in August makes the probabilities of a lackluster trading environment prevalent. Take profits in long positions that are showing weakness, but be prepared to buy right back in again upon seeing the strength coming back into the markets. Crude oil prices are trading in a range. Interest rates are not affecting investor sentiment. The US dollar is trading relatively flat. Currently there is nothing in the markets to stimulate any great buying. At the same time there is nothing to stimulate any great selling.
8/21 - Stock Market Comments
The strength in the Dow last week started with a Hammer signal and an Inverted Hammer signal right at the 50 day moving average. The NASDAQ consolidated on Friday but closed at the top end of the trading range, forming a Hanging Man signal. The weaker open this morning in the futures reveals the possibility of profit-taking this morning. Expect some consolidation for the next day or so, but the uptrend should be intact until a definite sell signal is seen in both the Dow and the NASDAQ at the same time. Continue to hold long positions but do not be afraid to take some profits in the short term.
8/18 - Stock Market Comments
On Thursday the markets didn't show any indication of a reversal. The expected consolidation after two or three strong up-days was evident. The uptrend should still be intact. However, it wouldn't be unusual to see some profit-taking happening on a Friday. Continue to hold long positions.
8/17 - Stock Market Comments
The Dow and the NASDAQ moved up above their resistance moving averages. The investor sentiment seems to have picked up to the positive side over the last couple of days, which would be an indication that we are in an uptrend for at least a few days. However, with the magnitude seen over the past two trading days, we would expect a pullback with some profit-taking before the uptrend continues. Today should result in some choppy trading but be prepared to watch for good buy situations over the next day or so.
8/16 - Stock Market Comments
Tuesday's bullish candle after the Inverted Hammer of Monday showed that the investor sentiment is now reversing right on the 50 day moving average in the Dow. This morning's futures indicate that the Bulls are still liking the reports about the indexes. Conintue to hold long positions and begin covering short positoins. There are still weak sectors like the Housing sector so stay short in those. But continue to look for more long positoins. Expect at least another few days to the upside.
8/15 - Stock Market Comments
Monday's attempt at a rally, which finally closed as an Inverted Hammer, is seeing the Bulls back in the market this morning with the futures up very strong. This now indicates a tendency for the trend to come up and attempt a test of the moving averages. So anticipate a day or two of a slow trend to the upside. We would still maintain existing positions on the long side, and watch to cover your short positions if they begin to start showing strength. Anticipate a few days of positive trading before the moving averages are tested.
8/14 - Stock Market Comments
The morning futures are showing enough strength to indicate that the market is continuing to move sideways. There doesn't seem to be any direction in this market and there probably will not be any direction in this market to indicate a strong move to either the upside or downside for at least the next week to week and a half. Hold a few shorts and hold a few longs but don't do anything aggressively.
8/11 - Stock Market Comments
Thursday's bounce in the Dow didn't seem to dramtically change anything in the downward bias. The NASDAQ popped up a little bit but still anticipate that the direction in the Dow is heading toward the 50 day moving average. The retail sales this morning didn't seem to add any strength to the markets. Today is Friday, which would probably indicate a lax trading day. A few of the long positions this week should have been closed and a few short positions should have been added.
8/7 - Stock Market Comments
The major Doji in the Dow on Friday continues to indicate a non-directional bias in these summertime markets. The NASDAQ had the opportunity to approach a major moving average on Friday but pulled away. The overall trend is still choppy. Stay predominently long but be nimble. Close long positions that do not reveal strong signals. Today's lower open in the futures after Friday's Doji should reveal softness in the markets for at least the next day or so.
8/4 - Stock Market Comments
The initial selling of Thursday ended very quickly. The buying going into the close provided a completely different scenario that could potentially have resulted from Thursday's weak open. The uptrend is continuing but still expect it to be slow and sloppy for the next week or so. Continue to hold long positions until a dramatic sell signal occurs in the market. There are still a few short positions that can be held but the slow uptrend is the predominant factor. The longer the uptrend persists, even at a slow pace, the more the high profit patterns will be forming.
8/3 - Stock Market Comments
The futures this morning are illustrating the lack of follow-through buying from Wednesday. With both the Dow and the NASDAQ in the overbought condition, the lack of any semblance of bullish follow-through further illustrates the toppy/choppy market conditions. Be ready to increase cash positions until this market provides more definition in the trend. The fact that we are going into the summer vacation time should provide more lethargic markets for the next couple of weeks. Having a lot of money exposed to the market may not be worth the risk.
8/2 - Stock Market Comments
The 'weaker' open on Tuesday confirmed what was indicated, that the Dow would be trading lower after the Bearish Harami and the Doji that formed in the NASDAQ. The NASDAQ still has stochastics heading in upward direction. The Dow is showing the stochastics turning back down in the overbought area. The positive futures this morning indicate a lack of aggressive selling in this possible pullback. That gives the indication that any selling in this area may just be profit-taking in this current uptrend. There are still strong sectors acting well such as the oil service companies. Continue to stay long in the positive charts and have a few short positions open in other sectors. More than likely this will look like a choppy market for the next day or so but there is nothing that indicates a very strong selling environment.
8/1 - Stock Market Comments
The Dow formed a small Bearish Harami on Monday at the same levels that it peaked out before. On Monday the NASDAQ closed just slightly above the 20 day moving average. However, the stochastics are still heading up. This morning's futures, opening slightly lower, could be indicating some choppy trading in this area for the next couple of days. In the short term, be prepared to take some long positions off the table and maybe add a few short positions. But expect a few days of possible pullback movement now that the Dow has hit the recent peaks one more time.