Tuesday, July 11, 2006

On the Cusp of Short Term Support

I'm sorry it's been a couple of days since I did a post. I've been very occupied with getting the beta test of our new product done (I have a real job too, ya know!)

The Dow Jones 30 is right on the cusp of breaking through short-term support. Indeed, I'm typing frantically because on my second screen I can see the $INDU getting closer and closer to that trendline. I'd hate to post this entry after the fact!


A longer-term perspective on the Dow shows the next two "stopping points" on the way down, should short term support be broken.


The NASDAQ, which has been extremely weak, is also on the verge on pushing past one of its Fib levels down to the next stop on the elevator.


OK, maybe I'll post more, but I want to click the Publish button before the Dow cracks!

36 comments:

Tim Knight said...

Umm, well. It cracked.

Good.

bsi87 said...

Yep, as we discussed. The neckline gave way. Projects to 10,300 on DJIA.

Anonymous said...

i'm not convinced yet

need more follow through volume for it to be a decisive crack

Jerry said...

might look at gm on the long side

Mark said...

Looking at the trend the Dow is following, it will likely hit 10975 by the end of today.

cristri25 said...

100 points down each day till friday .. COME ON RALLY MONKEY ... I mean rally DOWN.

cristri25 said...

i wonder why it never really goes down ... someone is holding up the market.

Lets have another late day sell off.

cristri25 said...

Look for DNA to dissapoint. that will help downside.

Mark said...

For close today, high trend puts it at 11035, low is about 10975.

Anonymous said...

Gold is on fire today. Here's why:

http://cbs.marketwatch.com/News/Story/Story.aspx?column=Metals+Stocks&siteid=mktw&dist=


Health care on fire as well. Interesting how the market overreacts on just about everything. That's not the sign of a healthy market. But since it's so unpredictable, I can't force myself to go either long or short.

I hate sitting on my hands, but these wild swings with no clear direction really put a damper on things.

-Tony

Anonymous said...

Why would anyone buy GM, stock may see 30-32 but its headed right back to $26-$27

Sanjay Sola said...

too many attacks on that 2100 level of the Nasdaq. definitely a distribution day. today would be 3 after that rally. you have to play probabilities here.

a preponderance of evidence that the market will crack soon.

Kapil Khanna said...

We need volume on the way down. These levels are not sufficient enough to draw the market below its prior low.

Anonymous said...

ndx/qqqq finding support off june lows and triggering buying

it looks like we have to test resistance yet once again

Anonymous said...

Increasing volume today after the reversal at 1:45 PM. Looks like the bounce off support has definitely triggered some technical buying, as "anonymous" just stated.

I have no idea what the catalyst would be for this action, other than purely technical buying. The Naz is going vertical, absolutely straight up after bouncing off 2100. S&P formed a double bottom at 1260 to quickly jump back into the green. Unreal. Looks like the close under the 200-day won't happen.

What will it take to crack this market?? It's definitely NOT healthy, yet it refuses to sell off.

Anonymous said...

Wow. That's all I can say right now.

HUGE buying interest in the Dow, Naz, and S&P, among a backdrop of bombings in India, poor earnings reports and guidance, warnings from Dow components, surging gold prices, and oil at $75.

What gives??

-Tony

downosedive said...

Anonymous - generally as so often the case, your comments sum the DJA so well there is nothing further to add at present. Maybe the bulls should be renamed the donkeys, on account of their stubboness!! Refusal to let it go, even when faced with a list of real negatives as long as your arm!

Mark said...

Someone is blowing sunshine up the bulls' donkey...

Anonymous said...

this market is testing bears nerve.

unhealthy market.

cristri25 said...

complete BS

cristri25 said...

i just dont get who is buying the market ... I hope DNA just drops a pile o crapola

Andrew M. said...

Look at NTRI...yesterday it was starting a downtrend moving below the MA. All technicals were pointing PUT...then WHAMMO, up over $4 on NO NEWS! Unless I am missing something, I didn't see any news that would spark a $4 gain. Very strange indeed!

Anonymous said...

The market has been hovering around short-term pivots and support/resistance lines for so long, I'm starting to get frustrated.

Just when you think one support level has been broken, the market does a COMPLETE and INSTANT turnaround on heavy volume.

Sure, earnings won't be horrible. We all know that. But the bottom line is, why is the volume so huge on the upside when it's clear that gains will be moderate at best?

I just can't see any rational reason to go rushing back into this market on high volume to drive up stock prices right now. If the markets were drifting up on low volume, then I could understand, but that's not the case.

Maybe I'll just stick to money market accounts...

-Tony

Hurricane5 said...

Andrew, when it comes to NTRI, no news is needed for the stock to explode. The quarter is less than 2 weeks away and investors are beginning to get excited. I've said this many times before and it bears repeating...NTRI will see $80 as weigh-station to $120. This is my stock pick of the year and I stand by it 100%.

Anonymous said...

Guys, No worries...be patient. The next week and a bit will signal the next leg down...... the markets are heavily overbought....

The bank of Japan is raising rates on thurday night.... that means liquidity leaving markets, economy. I'm got put on the commoditties and the drillers/oil. OXY.

The indexes haven't violated their major resistance levels .... and they won't. The markets can't go straight down and yes it seems silly that there is so much bad news that the markets then rally.

Every second presidential year... markets contract. And with a slowing economy, that = lower growth... lower growth will force the multiples to contract ..... which means companies like GOOG will go down. They need a good economy to do well.

The next week will be ugly.... apply the puts and shorts....

Mike Stone said...

The buying that comes in the afternoons like this is institutional buying programs. A lot is at stake here to keep the indexes up above support lines.

Check out the banking index - banking almost collapsed in 2000 when the Nazdaq popped. The Fed dropped interest rates to 1% largely to rescue banking so banks could have liquidity to start lending again and write off all those god awful dot-bomb loans.

Now at present - the most searched items in google have to do with mortgage financing. Real estate is slowing down and this is going to impact banks. Drying up liquidity from the BoJ and the US Fed will lead to even more hedge funds shutting down (we've lost several hundred already) and a whole slew of other banking problems.

Banks are doing everything in their power to keep equity markets up and running.

I believe we will see the Dow at under 4,000 before this secular bear is done.

The Japanese government managed to keep the Nikkei inflated for over 10yrs before the Nikkei finally capitulated and hit 7,000. I don't think we're going to see a 1987 style plunge just yet.

-Mike

PB said...

this market has no power or direction. All i know is that the bulls keep re-inventing themselves and always find a new reason to buy, no matter how unreasonable. It seems to me that they are very desperate, I guess they sense their eventual demise. Bull markets die, bears just hibernate!

downosedive said...

pb - yeah well at this rate, this bear is in danger of starting to grow horns.........the DJA will rally again tomorrow - the market gained strength in the 20 mintues after official close (futures)

cristri25 said...

yup. this market is not looking like a bear. it just will NOT go down.

Anonymous said...

Be patient... Markets have tended to historically falter in September/october.... we aren't going to crash this summer...but the down move will continue. All of you are forgetting the damage to every index chart.... the move averages continue to push everything down.. and the S&P is in a wedge......

Does anyone see a double top on oil $wtic?????hmmm...

Brian said...

Oil may be in a double top, but I see it making a measured pullback at a prior high, before it goes into it's next leg up. I think it's going into a bullish pattern -- a small cup and handle, ascending triangle. It held support in may and june, had 10 straight days rallying, and just kissed a new high. Looks strong to me, but time will tell.

dash said...

Being short this market seems to me like a very high risk, low return strategy, especially on the Nasdaq. Nasdaq short interest increased by 737 millions shares last month, the largest increase ever, and almost twice as large as the prior record of 398 million in March.

Short interest has increased by 24% ove rhte last 4 months as a percent of open interest now stands at 23.52%. The last time it got that high was May 2005 (23.78%) and Oct 2005 (23.46%). Six weeks latere the Nasdaq was 6.17% and 8.54% higher respectively.

Finally the ARMS index has been over 2 these last 4 days. That's heavily oversold. With the P/Es of large cap tech (DELL, MSFT) and large cap Pharma (Eli Lilly, Merck) at record lows, it's difficult to imagine a more favourable environment to be long.

Anonymous said...

agree with the person who said program buying, IT was program buying again. I managed to to trade and just make a few bucks for the day trading QLD. DNA is down AH but futures seem to be holding up. I think the market may put in some gains. OIL looks like it wont give up, headed to $80 in my opinion.

As for the overall market still bearish, sold my PSQ for a gain today and hope to re-enter under $70 sometime in the next week. GE is the next market mover. If GE disappoints expect the same move down as we had last Friday when MMM warned. I believe GE disappointed last quarter when they reported.

NASDAQ did bounce nicely this afternoon. I was suprised somewhat. Didnt know if I should go long or short around 2:30pm but market found direction and it was straight up. Today was a good day if you took any long positions before 12pm.

G2006

Hbarr said...

Energies look strong and have room to run. OIH has a 42 on the 5 day stochastic, which is rising. The leaders in the sector: BHI, HAL, SLB, RIG, VLO etc... have made bull flags.

They're getting the pump going into earnings and options expiry, and that's helping the S&P500.

PB said...

downosedive -- may I be your humble servant if this market is currently giving birth to a bull. Bull-shit! wait out the earnings season then what has the market to look forward to? If you believe "this bear is in danger of growing horns" -- then please be a gent and explain how this aging bull can possibly sprint to new highs here. Thanks for your input! Also, the futures did not 'rally' after the close. They simply went back to the level they 'sold-off' from in the last few minutes of trading. (at 10pm EST, futures are flat) I am also not sure how that bombing in India can have any positive sentiment on the 'war on terror'. This market is on auto-pilot and there is no one in the cockpit. Buckle up!!!

Anonymous said...

"This market is on auto-pilot and there is no one in the cockpit. Buckle up!!! """


LMAO