I’m short on time this weekend so will keep the commentary to a minimum and just focus on the chart of the Nasdaq and what it might be telling us about where we’re headed.  The market is definitely showing some signs of fatigue recently but continues to digest gains in a very health manner and could very well be coiling the spring for another push higher, quite possibly to the next level of major resistance which in the the case of the Nasdaq is in the 1900 – 1947 range.  Note that the 50 day moving average has now crossed above the 200 day moving average, forming “the golden cross” which is a decent indicator of a bullish market. I still think we’re probably setting up for one last push of a few percent which would market the top of this leg up before entering a significant retracement phase. 

Continue reading Nasdaq Flashes The Golden Cross; Coiling The Spring For Another Rally? →

One key component to pin pointing market tops and bottoms is the market reaction to news.  It’s something I’ve discussed quite a few times here in the past few years and with this V shaped market rally continuing into the stratosphere, it’s worth keeping an eye on to help determine when this rally might roll over for more than a few percentage points.  Certainly, there have been a few technical indications that the rally is cracking in the foundation, but the house that the bulls built remains standing for now with Dow 9000 and S&P 1000 in the cross hairs.  I mentioned last week that the inability of the bears to take control for than a day or two with buyers stepping in each time at key levels increasing the likelihood of an upside breakout out of consolidation.  On Monday, we got the confirmation of Friday’s strange end of day breakout, so the next leg up is in process.

Continue reading Market Sells The Green Shoot, But S&P 1000 Still In Sight →

Once again the bears can’t take the bull (er, I mean ball) and score.  There have been several indications over the past few weeks that this rally is on the verge of falling apart and each time the market is one move away from a key breakdown, buyers step in and push this market higher.  Frankly, I’m baffled at the way the buying has taken place particularly over the past week and ESPECIALLY in the last 15 minutes on Friday.  Window dressing? Perhaps.  Goverment intervention/manipulation? Perhaps.  Whatever it was, it wasn’t natural which was the capper on a week of mighty strange trading action (the sustained rally after the consumer confidence number was also a head scratcher).  The thin, volatile market where choppiness and unnatural trading prevail, prompted me to move more to the cash side, until a firm break out (with volume) out of the consolidation appears.  With Friday’s move and the overall resiliency of the market, it appears the odds are increasing of an upside breakout move, but let’s put an asterisk next to that Friday move and await more confirmation.  It should be noted that technically, the Nasdaq broke out at the end of the day Friday but the S&P and Dow remain below the 200 day moving averages.  So, while the Nasdaq remains relatively in the free and clear up here, the S&P and Dow still face significant hurdles.  Suffice it to say, it’s going to set up one wild week of trading.  In my opinion, where the market finishes the end of next week will determine the direction for the next several weeks.  Be ready on either side at this point or better yet, go enjoy warmer days and longer nights while this bull/bear battle play out at key resistance.  Let’s take a look at the charts..

Continue reading Bears Can’t Confirm Double Top, Is Another Rally Imminent? →

You can’t help but marvel at the resiliency of this market following the sharp V shaped recovery in the indices over the past 2 months.  Even during the first down week across the market, the pull back was fairly orderly, with a late day recovery on Friday keeping some key short term support intact (the 20 day moving averages of the S&P and Dow).  Then, right out of the gates this week we get a 3% rally, erasing much of last week’s pull back.  The action has prompted some analysts to compare the move to the 2003 rally which kicked off a 5 year bull market.  I think it’s way too soon to be making those kinds of comparisons but I have to admit that I’m not nearly as confident that this market will come close to re-testing the March lows as I was just a few weeks ago.  There are now several levels of considerable support that would need to breached to test those levels again.  In the shorter term, I remain considerably bearish and still think that at the very least this market needs to spend some time sideways before a meaningful rally above the 200 day moving averages can take place.  Let’s take a look at the charts.

Continue reading Resiliency Remains As Market Works Off Overbought Conditions →

Week after week, it’s the same story.. market continues to push forward as the rally continues to show it’s beginning to crack with subtle clues. Although on Thursday the market revealed the most glaring indication yet that this rally will soon take a breather.  The Nasdaq hit its 200 day moving average right around 1750 and ultimately turned tail and reversed to the downside with heavier volume than the day before.  That is a failure at a major resistance level in a bear market.  I don’t think I need to say anymore .. but I will.  1750 also happens to be another major source of resistance of the 2004 low.  I know, some of you might be saying (especially if your Larry Kudlow) that the great banking crisis is over, possibly even an aberration.  Less than two months ago, the world was coming to an end and now all of sudden we’re out of the woods and into a bull market, heading to 10,000.  Ok, I know most of my readers don’t believe that but CNBC would certainly have you believe it.  I like to think that we’re somewhere in the middle. Yes, we quite possibly averted a major disaster in the economy, but I also don’t think you get a V shaped recovery in an economy that takes a mammoth hit to the jaw. 

Continue reading Rally Continues To Tire As Nasdaq Hits 200 Day Moving Average →