|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
It sure does look like we're taking another turn for the worse by the charts. And Art Cashin (who is my favorite CNBC Commentator) said something today that was really negative. He has over 34 years in the market, and he's usually right I've noticed. When Art talks, I listen. He said: Quote:"After Thursday's 344 point drop and a lackluster Friday, next Monday can be a day of complete capitulation with Tuesday spiking down to set a new bottom".
I've never noticed something like this in my 15 years of watching the market, but it's something he's probably seen a number of times before. Even though Friday's candlestick was a 'Hammer' which can signal a reversal, the lower Bollinger Band on the Dow's chart is already starting to move lower. The VIX is nowhere near 30 yet, but if Art is right it may get there early next week. The News this week has been mostly negative, which gives me little reason to believe we are ready to rally again.
My chart analysis shows a number of Indicators that show we are not at a bottom yet, and the chart pattern for the last two months has turned bearish. It's almost certain in my opinion that we will go down to test the July 15th lows if the last two support levels fail on a closing basis. IF the Dow closes below 10950 I'll be shorting the Diamonds (DIA) until the RSI drops below 30, and will cover if it tries to get back above it. Stochastics dropping below 20 and then trying to break above it will be another signal to cover. If the VIX gets to 30 that's another sign we are about to bottom.
The weekly chart is looking mostly Bearish:
Happy Trading,
zz
 www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
I didn't see the News article that came out Friday after the close about the FED possibly coming up with a bail out plan for Freddie Mac and Fannie May this weekend.
http://finance.yahoo.com/tech-ticker/article/54394/Report-Treasury-Will-Inject-Capital-Into-Fannie-Freddie?tickers=FNM,FRE,MS,XLF,^DJI,^GSPC
IF they announce this happening before the opening bell on Monday, the market will most likely rally for a few days before it returns to reality. If you remember the announcements that bailed out AMBAC and MBNA, the market rallied only breifly before it continued on with the downtrend.
If this news doesn't come out before the opening bell on Monday, I stick to my prediction that Monday and Tuesday will be down days.
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
Today's DOW and VIX Charts ~ 'Black Monday' ~
It was down 504.48 points today closing AT the low of the day, and the RSI hasn't even dropped to the 30 line and Stochastics show it's not oversold below the 20 line yet! Huh??? Try figure that one out?
The bottom line is: This drop may not be close to being over yet. Today's HUGE red candlestick that closed below the closing price on July 15th, which was the LAST level of support says there's more pain to come.
Take a look at the VIX Index! Way above 30. with a high of 31.87 today.
That would normally signal a bottom, especially with the amazingly huge volume we saw today.
Maybe tomorrow we see a day of complete capitulation early, and then rally back hard to give us a reversal candlestick in the form of a Hammer or a Doji . Combine a reversal candlestick with the huge volume we saw today, and that might signal a better bottom than the July 15th one IF the intraday low on July 15th doesn't get taken out.
Maybe the catalyst for this possible bottom will be AIG getting the $75Billion from JP Morgan and Morgan Stanley the FED is trying to set up for them. If we know AIG won't fail, this truly could be as far down as it needs to go.
If AIG fails to get it's capital infusion and go into bankruptcy, the DOW is going to take another nose dive and the lower Bollinger Band on the weekly chart sits at 10605.58 so that's probably where it will be headed.
The wild card tomorrow will be the FED meeting and the announcement of a change to the interest rate, or not. This event has the potential to move the market either up or down depending on how the street reacts to it.
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
48 hours ago in the post above this one and on my other message board:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=32183146,
I made a prediction that the DOW would head down to 10605.58
Quote:If AIG fails to get it's capital infusion and go into bankruptcy, the DOW is going to take another nose dive and the lower Bollinger Band on the weekly chart sits at 10605.58 so that's probably where it will be headed.
(As far as I'm concerned, AIG failed to get what it asked for and 79.9% of the company was stolen by the FED's. The market reaction to this was the same as if they had gotten nothing.)
Today, the DOW closed at 10609.66
and the next level of support I see is from three years ago at just under 10250. Tomorrow might be the day it spikes down there and the RSI on the daily chart finally gets just below the 30 line where it will be time to load up on a few stocks going Long (even if it's just for an oversold rally).
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
Chart Analysis of the DOW:
EVERY Technical Indicator on the daily chart is pointing DOWN...
As the DOW continues in Falling Knife mode.
The weekly chart still looks VERY Bearish:
It's obvious that the Market didn't like the "Bailout Plan". Many think it won't be enough to fix all of the problems in the credit and housing markets. The DOW dropped 350 points the day the Senate approved it, and today the market dropped 450 points right after the House approved it. I expect more unexpected news from the FED next week that might give a temporary boost to the Market, but the Fundamentals are still in bad shape.
Reporting Season starts again next week. I think we will not see many companies beat analyst expectations this time around. In fact, I think we'll see a number of weaker than expected reports for the 3rd Quarter which will make the market head lower in the short term.
Read this article titled "Q3 Earnings: Not So Pretty":
http://www.cnbc.com/id/27012865
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
Today was a VERY BAD DAY for the DOW! If it closes 127 points below where it closed today, all levels of support will have been broken and it'll be time to put our crash helmets on again.
The Weekly Chart shows a Shooting Star candlestick so far, and ALL of the Technical Indicators I use are still headed down (except for the CCI).
It's still possible a Double Bottom chart pattern can be formed on the daily chart, but the most reliable Double Bottoms take many more than five sessions to form. It's best if it takes twice that long. Due to the insane volatility of the market lately, I doubt if this can be called a "true" Double Bottom even if it forms.
There are four "market moving" reports due on the Economic Calendar:
CPI-0830
Jobless Claims-0830
Industrial Production-0915
Philadelphia Fed Survey-1000
Today's PPI numbers were twice as bad as expected, so the CPI will probably fall in line. I'm sure there will be an increase in Jobless Claims, and Industrial Production will most likely fall too. I heard today that all twelve Fed regions were down for the first time in a long time, so the Philly Fed Survey is sure to be negative.
There are numerous Earnings Reports due out tomorrow, and EarningsWhisper.com is showing more negative surprises than positive ones.
Earnings on Thursday from: Bank of New York Mellon, BB&T, Citigroup, CIT Group, Continental, Harley-Davidson, Hershey, Merrill Lynch, Nokia, PNC Bank, Southwest Air, United Technologies, AMD, Capital One, Google and IBM
Overall, and I hate to say this, especially to all those that are planning their retirement off of their 401K or their pension fund, but I think the market is going to have a HUGE down day on Thursday unless some miracle happens. A lot depends on the Economic Reports and the Earnings we'll see from the above companies.
The sad thing is, I was going to post a chart analysis Sunday night calling last Friday as "THE Bottom" because of the Volume it had that day and the shape of the candlestick, and ALL of the Technical Indicators said the drop was overdone.
Today's action shows me that we may not have seen the bottom yet. There's still a glimmer of hope for tomorrow, but it will be a day of decision. I know what I'm going to have to do if the market crashes again. Do YOU?
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
TODAY WAS EXACTLY WHAT I WAS HOPING FOR!
THIS "MAY" REALLY BE "THE" BOTTOM...
It will be confirmed as the bottom the day the DOW closes above the green line on this chart.
Due to the short amount of time it took to form this Double Bottom chart pattern and the extreme volatility of the market these days, it may not be real. In order for it to work, it must move up quickly to take on the green line and close above it without dilly-dallying around. Since it formed so quick, it must yield quickly or else...The second confirmation of the Bull market will be when it closes above 9794.37 That will eliminate the potential for a Double Top to form.
This could turn from a potential Double Bottom (Bullish) into a real Double Top (Bearish) chart pattern in a very short amount of time, so BEWARE! I'll call it when I see it happen, as soon as I see it happen...
The weekly chart has improved dramatically over the one I posted yesterday just above this post.
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Newbie
Joined: 10/17/2008
Posts: 9
Location: Buford GA
|
Hello,
I just joinded this site...what a great find!... I'm not a chartist, but would like to know more. I manage all my personal investments, as I retired early last year at 51. To date I've managed to hold a small gain for the year playing short ETF's as a hedge to the long equities I don't really want to sell. I also have about 40% in cash. I'm finding this market is so volitile that it's frustrating to watch. Not to mention it's virtually impossible to trade. I basically swing trade and have found that I don't have the right tools or experience to Day-Trade...plus it requires 100% of your time and is very intense. I'd appreciate any thoughts on the strategy below I'm thinking of putting in place next week.
I plan to put very low limit bids on about 10 high quality stocks near or just above their 52 week drop from last Friday. Plus I will put in sell orders for the SDS short fund I'm hedged with in three positions starting around the highs from last Friday and going up 10 points each for the other two bids, to scale back SDS as the market goes down. I want to get more “long” as the bottom forms.
My thinking is that we will ultimately re-test last Friday’s lows between now and next March and will have a very very large volume capitulation on that day where-as some of my orders will execute….
If we hold the re-test we go back up mega points on the Dow and don’t re-visit the lows below 8K on the Dow again (in my life-time hopefully)… If we don’t hold the re-test, we go quite a bit lower and all of my limit and sell orders are executed and I’m 100% long for the duration and willing to risk the additional downside since most of these stocks pay an average 6% dividends and are not going under……IMO. FYI - The stocks I'm looking at are (GE, WMT, TRV, T, MO, BMY, AEE, DUK, CSCO, DD, + 2 bond funds MVS and NIO)
If we don’t re-test the lows this year and none of these orders execute than I’m market still neutral with the SDS shares in the account and happy to ride out the year end that way and will re-evaluate in 09… Any comments are appreciated... thanks in advance....
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
rdrye1,
Welcome! to Finviz.com
I found this site not too long ago myself, and it has quickly become one of my favorites.
It sounds like you know exactly what you're doing with your investment planning, though it's fairly complicated. There's not much advice I can give other than to say your plan sounds very logical. You've got it covered either way the market runs the rest of this year and into the next.
I'm not a licensed broker, so I can't legally give specific advice other than I own about half of the ten dividend stocks you are considering in my Dad's long term hold account. He started buying in the early '60's so he is still doing well even after this retracement. I manage this account and hedge it a bit differently than you do. When the market turns into the bear, I short more shares than he owns and still make money while the market heads down. I covered all of those short positions last Friday.
I wish you Luck! with your strategy into the future...
Happy Trading,
zz
www.stock-market-lessons.com
|
|
Rank: Advanced Member
Joined: 8/14/2008
Posts: 314
Location: Memphis
|
It's important to remember that today was Options Expiration Friday, which always adds additional volatility into the closing bell. Because of this, the DOW reversed trend after lunch as it usually does. Before this reversal, the daily candlestick for today was a very bullish looking white candle with a lower wick. It's acceptable practice to disregard in part the final hours on a Friday like this. Now it's up to next Monday's action to determine the trend to come. In a way, it will be a "make it, or break it" kind of day.
The weekly chart's Technical Indicators are also mixed, with a slight bias towards the Bear. If Friday hadn't of been Options Expiration Friday, and the DOW had closed at the highs of the day at around 9280. this weekly chart would have ended up much more to the Bull than the Bear.
Happy Trading,
zz
www.stock-market-lessons.com
|
|
|
Guest |
