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Post by DJF on Mar 24, 2004 20:39:16 GMT -5
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Post by DJF on Mar 24, 2004 20:46:06 GMT -5
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Post by DJF on Mar 24, 2004 22:03:22 GMT -5
Comparing the current decline to a pullback - similar to the one marked this time last year. - Current decline is well above fib retracements - it would take another 100 points to bring it the 38% retracement and a further 300 points+ to take it down to the 62% retracement. Last years decline eroded 62% of the prior advance. On a % loss basis, the current move down is no where near a crash
- The volume in the current move has been steadily declining - there has been no fear sell off typical in a crash. A similar volume trend was observed in last years consolidation. The important feature in both a crash and consolidation decline is the huge increase in volume as prices retest prior lows - differentiating the pattern from a continuation in the downtrend
- Both Dec-Mar 2003 and Jan-Apr2004(?) consolidations are marked by well defined downward channels. Based on this alone - the current decline should put a low in at 1,897 as per the second touch point of the lower channel which marked the first half of the double bottom last year. Look for a retest of this low in April. In 2003, the first half of the double bottom was marked by a crossover in the MACD trigger line of the NASDAQ and the secondary indicator $NAA50. Watch for this again. Last year, the MACD of the $NAA50 crossed above -100, this year it is close to -200. In the NASDAQ, last year the MACD crossed off lows of -25, this year it is closer to -35.
- Last year, the $NAA50 fell from highs of 1,227 (827 pts 67%) to from a double bottom at 350. This year, the $NAA50 has fallen from 1,777 and is still declining at 630 (1,147 pts 65%)
- Last year, the $BPCOMPQ declined from highs of 49 down to 35 (14 pts 29%). This year, the indicator has declined from highs of 77 to 59 and is still falling (18 pts 26%)
- Last year the $NASI declined from highs of 258 to lows of -664 (922 point drop). This year, the $NASI has declined from 623 to -392 and is still falling (1,015 point drop)
- The real question here is not if the market will bounce, but when the market bounces will it form a market double top, or, extend into a lengthy rally - potentially to 2,800 {the latter is *highly* unlikely - but, if you measure the distance of the last run and add it to the lows of the current consolidation that is the price target you get. In addition, check the chart below - we have test 2,160 peak resistance from spring 2001 but what about that peak of 2,772 from Christmas 2000???}
stockcharts.com/charts/historical/nasdaq1986.html
#nosmileys#nosmileys |
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Post by DJF on Mar 25, 2004 16:42:51 GMT -5
Step 1 was yesterday - the first half of the double bottom is in. Now for move to 1,988-2,000 before weakness takes prices back to 1,896. Watch the volume when the market gets close to 1,900. If volume expands - go long. Watch for MACD trigger line crossover in tech indices and $NAA50. Step 2 will likely complete in mid- to late April - this will be the time to buy.
DD as always,
DJF
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Post by DJF on Mar 31, 2004 21:44:44 GMT -5
We have exceeed step 2 expectations - but now the market is at a major crux; resistance from the 50-day SMA, the psychological 2,000 level, and Jan-Apr downward channel resistance will likely end the recent rally. Tomorrow's action is entirely dependent on the jobs data. But, if this data is bad, and the market (predicatble) sells on the news - watch how the secondary market indicators react. Why? - Ultimate Oscillator and slow stochs in the $NAA50 have breached long term bearish divergences from their January highs.
- The $BPCOMPQ has crossed its 5-day EMA and its ultimate oscillator is in the process of forming its third (and final) fan line.
- The MACD of the NASDAQ composite has confirmed its crossover - unlike previous tests of the declining channel line where the MACD trigger line rebounded southwards.
- NASDAQ slow stochs are just shy of the mid-line, but have crept above former support (now resistance) - look for the blue hashed line in the Aug203-Apr2004 slow stoch chart to act as support
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Post by DJF on Apr 9, 2004 16:26:57 GMT -5
Jobs data enthusiasm looks to have worked its way out of the market and geopolitical concerns are back to the fore. The rapid ascent looks primed for a pullback. - Thursday's bearish black candlestick does not help the bulls (coming off stellar YHOO action, the market should have performed better).
- Weekly chart shows a bearish evening star candlestick combo
- Media commentary suggests bulls will be back in force in Monday, a contrarian indicator.
Technicals remain strong. - RSI and MACD trigger lines are at levels higher than when the market traded closer to 2,100.
- Slow stochs [14,3] have crossed over, but remain above the 80 line.
Downside on Monday would change this picture - but as things stand - there is no sell signal here. stockcharts.com/gallery?%24compqThe pullback will test the 50-day SMA (just as the March breakdown bounced back to test it - confirming the downside break, the April breakthrough needs to test it to confirm, or not to confirm, the new rally). A loss of the 50-day SMA would be a definite sell signal and return bulls to the sidelines until the pullback completes a likely test of near term lows at 1,896. DD as always, DJF |
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Post by DJF on Apr 14, 2004 22:36:25 GMT -5
Downtrend to retest double bottom in play. Look for - Light volume - below the 60-day EMA, irrespective of up or down days
- Potentially sharp retreats - but low volume is key, these shake weak hands, but not the institutions who are acquiring the shares. If volume increases to 20% above average - then we have institutional involvement
- The double bottom will complete on a 1%+ gain on heavy volume (20% over average) with trigger line crossover in MACD, and an OBV line above the 20-day SMA. Slow stochs should rise - confirming the end of the double bottom once above the mid-line [50]
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Post by DJF on Apr 20, 2004 20:31:07 GMT -5
Loss of step 2 congestion on heavier volume, now heading into step 3. Watch for - Bullish divergences in MACD, slow stochs, and ultimate oscillator technicals. Should occur in markets and their secondary indicators
- Higher trading volume down to mid-March lows, but lower volume on moves beyond these lows. We are looking for accumulation by institutions as stocks become better value. New near term lows on light volume mark the last of the weak hands bailing, not fresh selling. Should volume decline into new lows, but pick up once fresh lows are made, you have controlled selling and a continuation of the downtrend
- New breakouts as fresh leaders emerge - there are always sectors performing well in a downtrend - these are the sectors that will take the market out of its correction
- Step 3 will complete on a heavy volume, bullish candlestick(s) ie. hammer/bullish piercing/or morning star, followed in 4-10 days by a second high volume, higher close day (as per Investors Business Daily rules).
- Aggressive GTC orders can be peppered close to March lows and a few points below. Full positions in these stocks should be taken on confirmation of a rally off the double bottom. Run tight stops in these positions as these will be "catch a falling knife" plays - in case the double bottom should fail
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Post by DJF on May 17, 2004 0:46:59 GMT -5
We have entered the bowels of the double bottom - but I am not convinced that what we see is indeed a double bottom. Why? [1] Weekly NASDAQ chart looks very poorly - we have a channel breakdown for the bull rally started last year. This will soon be confirmed by a loss in the slow stoch median line. OBV and MACD are negative - supported by the huge distribution week that took the market to the rising support trendline (and eventually through it).  [2] Secondary indicators have all but negated their bullish trend, thereby 'reseting' the double bottom count. Prior bullish divergences have been negated. The $NASI will likely lead the next rally. Look for a situation as occurred in Dec 2004; 5-day EMA crossover, soon followed by a break of the last near term high {hashed green line}. In the current situation this line is close to zero, over 600 points away from where the indicator sits now. For such an even we should look for a relief rally to form a new (lower) near term high, a fresh $NASI low, and then a break of this lower near term high to signal the next big rally. Such a scenario is unlikely to happen for another 3-4 weeks - too long for the current double bottom (in the NASDAQ) to succeed. Look for a break of March 2004 lows and the preperation of a new double bottom. In addition, watch for a break in the large bearish trendlines (of the $NASI) marked in the MACD, Ultimate Oscialltor and Slow stochastics - a break of this will confirm a lengthy (2-3 month) bull rally.  The stocks above the 50-day SMA indicator is still in decline. Ultimate Oscillator has not mapped a bullish divergence, and the MACD may (or may not) do so. However, this indicator is oversold and should not extend much lower (but could move sideways for a while).  The BPCOMPQ indicator is the most bearish of the secondary indicators - next support is down at 35 (and 25 after that stockcharts.com/gallery?$BPCOMPQ). I see nothing to indicate a market bottom soon (no bullish divergences in MACD, Slow Stochs, or Ultimate Oscillator - or crossover in 5-day EMA) suggesting a break of March 2004 lows (in the NASDAQ) and a failure of the double bottom.  [3] In the NASDAQ, we have not seen high volume trading into the March 2004 low - instead we saw high volume selling down to this low and limp trading at the low - not at all like the action in March 2003. A break of the March 2004 low is a sell/short play at this point.  |
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Post by DJF on Jul 6, 2004 22:56:13 GMT -5
Are we entering the first phase of a new double bottom? The Mar-May bottom doesn't look the right fit as outlined previously and below. There is a possibility of a triple bottom, this will depend on how the technicals and secondary indicators look as we approach 1,896. [1] Weekly NASDAQ chart confirmed the end to the March 2003 rally on May 17th. OBV and MACD are in the red, although slow stochs did creep back above 50 (the mid-line). The latter marks a bull trap as the market failed to climb into its prior rising channel line - instead, bouncing neatly off resistance/former support, confirming weakness.  [2] Only one secondary indicator, $NAA50, succeeded in forming bullish divergence with respect to the March and May lows. However, the reaction high between the (bullish divergent) lows has yet to be breached - until this happens the bullish divergence is not confirmed. This does not look like it will happen and we should watch for new lows (and a fresh bullish divergence).  The $NASI has maintained decent strength, but failed to mark a double bottom because; [1] The bullish divergence between the $NASI Mar and May lows, and its MACD/Ultimate Oscillator/Slow stochs was weak, or non-existent, and [2] The $NASI did not climb over the last reaction high in April (as per $NAA50).  The BPCOMPQ has looked the weakest of the secondary indicators - failing to map any bullish divergence between March and May lows, and rallying in a sluggish trend. Support for this indicator lurks down at 35 and this looks to be the best place to watch for a bullish divergence. The BPCOMPQ measures the number of NASDAQ stocks showing buy signals as per point-n-figure charts. Without a strong BPCOMPQ whatever rally materialises will likely fail as fewer stocks carry the weight of the upward move.  [3] In the NASDAQ, we have not seen strong follow through volume to the upside. Only the last couple of weeks have seen above average trading, and two of those days were distribution days. We are in a second "step 3" of a move to retest prior lows, and likely to new lows. I have estimated where this low will be as marked by the trendline channels, and a measured move from June highs. The target is c1,824. When we reach it I will reassess the potential for a double bottom.  DD as always, DJF |
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Post by DJF on Jul 20, 2004 22:03:27 GMT -5
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Post by WOW GOLD on Aug 26, 2008 0:08:43 GMT -5
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