Daily Market Comments - September 2006
9/29 - Stock Market Comments
Thursday's selling early in the day, followed by buying in the afternoon, showed the healthy uptrend still in progress along this upper trend channel. The morning furtures still show buyers in this market, albeit without any great enthusiasm, but it indicates the uptrend should still be in progress. Crude oil prices are definitely affecting the fate of the equity markets. After trading higher most of the day on Thursday, crude oil prices finally came back down to the lower end of the trading range, indicating that the downtrend may still be in progress for crude oil. Continue to hold long positions and watch what occurs along this upper trend channel.
9/28 - Stock Market Comments
Everybody is watching to see if the Dow will close above the 11,720 area, the all-time high. In the process of doing that, the Dow is bobbing along the top end of its trading channel. Continue to stay long but be nimble. The great expectation of closing at record highs can be dashed. A failure to do so could cause 'disappointing selling', everybody selling off because the market could not get to a new high. Watch what type of formations the candlesticks produce at these levels. Obviously, a strong bullish candle is required as evidence that the top of the trend channel is not going to act as resistance anymore. Be prepared to take profits on the short term trades as selling comes into these markets going into the close.
9/27 - Stock Market Comments
The Dow has moved from the bottom of its uptrending channel to the top of its uptrending channel in two days. This was accomplished by two strong bullish days and the fact that the uptrending channel is getting narrower. This morning's futures indicate weakness. Once again, the top of the trend channel needs to be watched to see if it's going to act as resistance. With the channel still in an uptrend, trying to trade long and short is becoming difficult. Pullbacks to the bottom of the channel are doing so in a much shorter time frame. Keep watching the top of the trend channel to see if there is going to be strength to push it through that level in the next few days.
9/26 - Stock Market Comments
The positive trading on Monday saw both the Dow and the NASDAQ at the bottom of their trading channels. Now watch to see if this trading channel doesn't continue its slow uptrend in the markets. Unless we see some severe selling early today, short positions should be watched very closely and stopped out immediately if they are showing signs of strength. This becomes a very difficult trading market with the trend of the market in a slow uptrend. This makes holding long positions more reasonable, closing them out at the top of the trading channels and buying back in at the bottom the trading channels.
9/25 - Stock Market Comments
The futures this morning are showing some buying. This is probably due to the weakness in crude oil prices. The weakness seen in Friday's trading was confirmation of the sell signals that formed in both the Dow and the NASDAQ on Thursday. Despite this morning's strength in the futures, still watch for a day or two more to the downside in the market trends. The 20 day moving average should be the likely target for both indexes. The short positions should be the predominant trades for the next couple of days. However, the pullback in these markets may be limited.
9/22 - Stock Market Comments
The uptrending resistance level in the Dow and the NASDAQ was obviously the critical level. After Wednesday's last surge up to the trend line, it became apparent that the Bulls could not push through that level. The hard sellooff on Thursday created Bearish Engulfing signals in the NASDAQ, S&P 500, and the Russell 2000. The Dow did not form a true Bearish Engulfing signal. However, it revealed the important information we were looking for. The upper trend line resistance was not going to be breached. Expect a test of the bottom of the trend channel over the next few days. Take profits on long positions and add short-term short positions.
9/21 - Stock Market Comments
A strong bullish sentiment seen early in the day on Wednesday was not deterred after the Fed announcement. Once again, both indexes are nudging the top trading channel. Although both indexes are in the overbought condition, any signs of weakness have been consistently negated during this uptrend. A breakout through this trend channel should start bringing some enthusiastic buying into the markets. Continue to be nimble while holding long positions.
Continue to watch for a candlestick sell signal in the indexes. Until the markets can break through the top of the trend channel, it still acts as resistance with a potential that the Bulls could finally break and the Bears start taking over.
9/20 - Stock Market Comments
Tuesday showed a Hanging Man signal in the Dow and a Bearish Engulfing signal in the NASDAQ. Although the markets are opening positive today, watch for resistance at the top of the trend channel. Continue to hold long positions but still be prepared for a reversal at the top of the trend channel.
9/19 - Stock Market Comments
The indecisive trading on Monday was still maintained along the upper trend channel that both the Dow and the NASDAQ has formed over the past six weeks. This morning's futures were given some strength due to the inflation report. As of now, although the markets are in the overbought condition, there have not been any definite sell signals. Continue to hold long positions until a strong sell signal becomes evident in the markets. With the uptrend being tentative, adding a short position or two to the portfolio is still prudent.
9/18 - Stock Market Comments
The Dow sold off near the end of the day on Friday, forming almost a Shooting Star signal, but not quite. The NASDAQ closed higher but still formed an indecisive Spinning Top-type signal. Both indexes are trading at the top of their trading channels. Stochastics are in the overbought condition. These are conditions where you should be ready to take profits upon seeing decisive weakness in the markets today. Pre-market futures are showing the moderate weakness in the Dow but the NASDAQ remains relatively flat. Continue to stay long but be prepared to take profits today if the selling starts to take control. Crude oil prices formed a Doji/Hammer on Friday, indicating a potential bounce in price early this week. That could cause some sluggishness in the equity markets for a few days.
9/15 - Stock Market Comments
The Dow sold off slightly on Thursday while the NASDAQ held steady. This implied profit-taking during an uptrend. Both the Dow and the NASDAQ have come back up toward the top of their trading channels. The pre-market futures are showing good strength. Continue to hold long positions but watch how the market closes today. Today's trading needs to see the strength continue into the close which would bring the trading up above the top of the trading channel that has been forming for the past month and a half. A weak close after a strong open today would indicate that the top of the trend channel was going to continue to act as resistance. Crude oil prices are continuing to show weakness while interest rates continue to stay relatively low.
9/14 - Stock Market Comments
The uptrend continued with early consolidation on Wednesday followed by buying in the afternoon. The indexes are now trading at four-month highs. Both the Dow and the NASDAQ are approaching the top end of their trading channels. After the strong rally of the past three days, witnessing some consolidation with profit-taking will not be unexpected. Continue to hold long positions until definite sell signals appear. The weakness in crude oil prices and the strength in bond prices have been diminishing investor anxiety.
9/13 - Stock Market Comments
The markets moved in an upward direction and did so with much more energy than expected. The Dow and the NASDAQ closed at recent highs. Stochastics have curled back up. After the bounce off the 20 day moving average, both the Dow and the NASDAQ have moved right back up toward the top of their trading channels. After the strong up-move on Tuesday, expect some consolidation in today's trading but the uptrend should still be intact. Most of the short positions were stopped out in Tuesday's rally. Continue to hold long positions until a candlestick sell signal indicates that the uptrend is over. The lower crude oil prices as well as lower interest rates have dramatically reduced investor anxiety.
9/12 - Stock Market Comments
The markets opened up weak on Monday, but closed at the higher end of the trading range. The Dow pulled back and just touched the 20 day moving average before bouncing back up. The NASDAQ opened lower, near the 20 day moving average, and formed a Bullish Engulfing signal by the end of the day. This created more evidence that the 20 day moving average was going to act as support in this slow uptrend of the markets. As it appears that the markets are not in any hurry to move in one direction or the other, maintaining long and short positions in the portfolio is the proper strategy. On Monday, the sector indexes showed strong sell signals in the oil and gas area, the mining area, and gold and steels. The semiconductors showed bullish signals.
9/11 - Stock Market Comments
Positive trading on Friday produced a Bullish Harami in the Dow right on the 20 day moving average. This provided the possibility that the uptrend would remain intact using the 20 day moving average as support. This morning's futures are showing enough weakness to negate the positive trading of Friday. A lower open this morning followed by immediate selling would indicate that Friday's positive trading was just a reaction bounce at the 20 day moving average. The QQQQ's appear to be opening at the same open of Friday. Immediate weakness from that level has the potential of forming a Kicker signal to the down side. This would become strong evidence that the downtrend that started last week was still in progress. Continue to add short positions to the portfolio on immediate weakness this morning.
9/8 - Stock Market Comments
The effects of the Evening Star signal and the Kicker signal was seen yesterday in the markets. The selling brought both the Dow and the NASDAQ back very close to the 20 day moving average. Stochastics in both indexes have curled down and indicate more downside. Another bearish day in the markets today would breach the 20 day moving average and more than likely make the 50 day moving average the next likely target. An indecisive trading day such as a doji or a hammer day, keeping prices above the 20 day moving average, would indicate that a trend channel was likely in progress. Continue to add some short positions to the portfolio. The sectors that are acting weak will continue to show weakness.
9/7 - Stock Market Comments
Yesterday's futures showed a substantial selling bias before the open. The NASDAQ formed a kicker signal to the downside. The uptrend in both the Dow and the NASDAQ was clearly reversed with the kicker signal in the NASDAQ and an Evening Star signal in the Dow. The longer term trend may not have been reversed but the short-term trend definitely reflects a pullback possibility of the 20 day moving average for the Dow as well as the NASDAQ. Anticipate further weakness from these levels for at least the next few days. Add to the short positions, take profits in long positions that have started to roll over.
9/6 - Stock Market Comments
The weakness in the futures this morning might be showing some indications of the markets getting toppy. Stochastics are in the overbought condition. Expect some profit taking after the uptrend of the past few weeks. But unless the markets finish weak today, the trend should still be the predominant factor. Would not expect to be aggressively buying first thing this morning. The uptrend will persist if the markets do not close near their lower end of the trading range on the day.
9/5 - Stock Market Comments
After the doji forming in the Dow on Thursday, the market had the opportunity to go into either direction. The doji had formed right at a recent high. As we saw, the Bulls were still in control, taking prices up above the recent highs. The NASDAQ formed a doji on Friday. It closed near the high of the first of July. Both indexes are in the overbought condition. The NASDAQ has the potential of testing the 200 day moving average. Today is usually the first day of the Fall trading season. Everybody is back from vacation. Volume should pick up. It would not be unusual to see some consolidation after the light volume rally that has occurred over the past few weeks. Currently the uptrend should still be in progress but be nimble. There may be some portfolio shifting with the new money coming back into the market. Continue to hold long positions until a severe reversal signal appears in the markets.
9/1 - Stock Market Comments
The Dow formed a Doji yesterday at the recent high of mid August. A weaker open today would have represented of failure at the top, creating a double top. However, this morning futures are trading positive after the labor report. A strong open today will need to see a strong close to continue the uptrend. what does not need to be seen for the Bulls is a strong open followed by a weaker close, creating a dark candle or a bearish signal. The NASDAQ still has a potential of testing the 200 day moving average. Interest rates keep dropping. Crude oil prices are trying to bottom but are not showing any great strength. Continue to hold long positions until a dramatic sell signal appears in this uptrend.