Bears Make Defining Move, Retest of Lows More Likely

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

Last Friday’s action was a polar opposite of the previous Friday.  Last time around, there was Charlie Gasparino saving the day for the bulls, with the announcement of an imminent Ambac bailout.  A furious 30 minute rally saved the indices from breaking short term support levels, which would have created the likelihood of a retest of those January lows.  As it turns out, that move was just delayed by a week.  With a half hour to go on Friday and the indices breaking short term support levels once again (details in the charts below), you wondered if there was going to be yet another speculative rumor floated about that would save the day.  If not, then perhaps some good old fashioned plunge protection team buying to save the day.  Nothing.  This time around it was nowhere to be found, leaving the indices in a precarious situation with a retest of those January now very much likely in the coming days.  What a difference a week makes. 

Take a look at a chart of the Nasdaq and you notice that it has taken out support of a triangle formation with increasing sell volume on Friday.  If there is one bright spot to Friday’s move, it’s that sell volume wasn’t extreme, but you can’t help but believe that this sets us up for a retest of the January lows soon.

The S&P has also taken out support of the short upward trend off the big capitulation day a few weeks ago, setting up a likely move to test the January lows around 1275 in the coming days.

The Dow too, couldn’t quite bust through the next level of resistance around 12750, but hasn’t quite busted through short term support either.  However, given Friday’s momemtum to the downside, it appears to be just a matter of time.

Friday’s move was one of the most siginificant in since the capitulation in mid January and really puts the bears in control in the short term.  If you’ve captured some profits in recent days, it might be a good idea to lock it in and if you’re sitting on some losses don’t let them get out of hand.  Cut ’em quick and have a seat on the sidelines until the technical action improves.

::: Model Portfolio :::

** This section will now appear as a separate report to be published every other Wednesday

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1.Silver: 9.25%
2. Toy & Hobby Stores: 6.40
%
3. Music & Video Stores: 6.25%
4. Computer Based Systems: 5.35%
5. Independent Oil & Gas: 4.25%
6. Gold: 3.30%
7. Consumer Services:  3.25%
8. Personal Computers: 3.20%
9. Computer Peripherals: 3.10%
10. Auto Parts Wholesale: 3.05%

– Top 10 Worst Performing Industries For the Week –

1. Dairy Products: -10.40%
2. Processing Systems & Products: -9.40%
3. Major Airlines: -9.35%
4. Sporting Goods Stores: -8.85
6. Banks – SE: -8.60%
7. Recreational Goods: -7.85%
8. Catalog & Mail Order Houses: -7.15%
9. Office Supplies: -6.35%
10. Banks – Mid Atlantic: -6.25%

– Top 5 Best Performing ETFs For the Week –
 
1. HLDRS Regional Bank (RKH) 6.38%
2. KBW Bank (KBE)  6.00%
3. US Broker Dealer (IAI) 7.40%
4. Ishares Brazil (EWZ) 7.30%
5. Market Vectors Gold Miners (GDX) 7.15%

– Worst 5 Performing ETF’s –

1. HLDRS Regional Bank (RKH) -6.40%
2. KBW Bank (KBE) -6.00%
3. 
iShares Broker/Dealer (IAI) -5.60%
4. HLDRS Internet (HHH) -5.10%
5. SPDR Financial (XLF
) -5.05%

:::  IPO’s Worth Watching for This Week :::

This section will now appear as a separate post on Mondays (if there are some interesting IPO’s coming to market).  It continues to be a very slow IPO market this year, but maybe Visa will help jump start it towards the end of this month.

While 2008 should be a much slower year for IPO’s considering the deterioration of the market, there will continue to be some good companies coming to market here and there.  I’ll be highlighting the best IPO’s every Monday.

::: Upcoming Economic Reports (3/3/2008– 3/7/2008) :::

Monday:         Construction Spending, ISM Index
Tuesday:       Auto/Truck Sales
Wednesday:  ADP Employment, Productivity, Factory Orders, ISM Services, Crude Inventories, Fed’s Beige Book
Thursday:      Pending Home Sales, Initial Claims
Friday:            Nonfarm Payrolls, Unemployment Rate

::: Earnings I’m Watching This Week :::

Monday:
51Jobs (JOBS), Home Inns & Hotels Management (HMIN)

Tuesday:
Balchem (BCPC), Gafisa (GFA), Perficient (PRFT), Simcere Pharmaceutical Group (SCR), Sun Hydraulics (SNHY), Trina Solar (TSL)

Wednesday:
Canadian Solar (CSIQ), Comtech Telecommunications (CMTL), Costco (COST), DXP Enterprises (DXPE), Fuel Tech (FTEK), Gasco Energy (GSX), Mindray Medical (MR), Smith Micro Software (SMSI), Union Drilling (UDRL)

Thursday:
American Oriental (AOB), Copart (CPRT), Daystar Technologies (DSTI), Dynamic Materials (BOOM), Sun Healthcare Group (SUNH), Urban Outfitters (URBN)

Friday:
Veolia Environment (VE)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Despite Inflation Data & Google, Market Breaks Out But Volume A Concern

2. Losses Mount, Stock Rises in Fannie Mae (FNM) & Toll Brothers (TOL)

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Comments on Bears Make Defining Move, Retest of Lows More Likely »

March 4, 2008

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