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Sunday, April 22, 2007 11:24:32 AM
Amateur Investors Weekend Stock Market Analysis (4/21/07)
http://www.amateur-investor.net/Weekend_Market_Analysis_April_21_07.htm
It was somewhat surprising the major averages rallied as strongly as they did this week without going through at least a minor pullback. One of the reasons, outside of earnings reports, is that the market may have gotten a boost from the drop in the price of Crude Oil. As we have seen in the past there has been an inverse relationship between the price of Crude Oil and the Dow. When the price of Crude Oil has dropped (point A to B) the Dow has generally rallied (points C to D) and when the price of Crude Oil has risen (points B to A) the Dow has dropped (points D to C). During the past three weeks the price of crude Oil has fallen (points E to F) which has been followed by a 3 week rally in the Dow (points G to H).
As far as the major averages the Dow has now risen well above it previous February high but now is becoming rather overextended and is due for at least a minor pullback. If a pullback does develop look for support to occur at its 10 Day EMA (blue line) near 12740. Meanwhile as long as the Dow remains above its newly developed upward trend line (black line) near 12600 then its up trend from the mid March low will remain intact.
The Nasdaq has now rallied back to its February high just above 2530 and if a pullback occurs look for support either at its 10 Day EMA (blue line) near 2500 or at its upward trend line near 2480 which coincides with its 20 Day EMA (green line). As long as the Nasdaq can hold support at or above its newly developed trend line from the March low and 20 Day EMA then its up trend will remain intact.
As for the S&P 500 it also has rallied well above its February high and if a minor pullback occurs look for support at its 10 Day EMA near 1464. Meanwhile just like the Dow and Nasdaq as long as the S&P 500 can hold support at or above its rising trend line and 20 Day EMA (green line) which is nearing the 1450 level then its up trend from the mid March low will remain intact.
Finally it now appears the S&P 500 is exhibiting the final 5th Wave of an Elliot 5 Wave pattern as talked about last weekend. Notice how the 4th wave (corrective wave) found support near its 200 Day EMA (green line) which has led to the final upward 5th wave. Of course the big question is how much higher will the S&P 500 go before the final 5th wave peaks leading to an ABC type correction?
Once again a brief review of a Elliot Wave 5 Wave Pattern shows that waves 1, 3 and 5 are upward moves with wave 3 lasting the longest while wave 1 and 5 are of short duration. Meanwhile waves 2 and 4 are corrective waves. Also notice that once the final upward 5th wave ends completing the 5 Wave pattern this is then followed by an ABC type correction.
http://www.amateur-investor.net/Weekend_Market_Analysis_April_21_07.htm
It was somewhat surprising the major averages rallied as strongly as they did this week without going through at least a minor pullback. One of the reasons, outside of earnings reports, is that the market may have gotten a boost from the drop in the price of Crude Oil. As we have seen in the past there has been an inverse relationship between the price of Crude Oil and the Dow. When the price of Crude Oil has dropped (point A to B) the Dow has generally rallied (points C to D) and when the price of Crude Oil has risen (points B to A) the Dow has dropped (points D to C). During the past three weeks the price of crude Oil has fallen (points E to F) which has been followed by a 3 week rally in the Dow (points G to H).
As far as the major averages the Dow has now risen well above it previous February high but now is becoming rather overextended and is due for at least a minor pullback. If a pullback does develop look for support to occur at its 10 Day EMA (blue line) near 12740. Meanwhile as long as the Dow remains above its newly developed upward trend line (black line) near 12600 then its up trend from the mid March low will remain intact.
The Nasdaq has now rallied back to its February high just above 2530 and if a pullback occurs look for support either at its 10 Day EMA (blue line) near 2500 or at its upward trend line near 2480 which coincides with its 20 Day EMA (green line). As long as the Nasdaq can hold support at or above its newly developed trend line from the March low and 20 Day EMA then its up trend will remain intact.
As for the S&P 500 it also has rallied well above its February high and if a minor pullback occurs look for support at its 10 Day EMA near 1464. Meanwhile just like the Dow and Nasdaq as long as the S&P 500 can hold support at or above its rising trend line and 20 Day EMA (green line) which is nearing the 1450 level then its up trend from the mid March low will remain intact.
Finally it now appears the S&P 500 is exhibiting the final 5th Wave of an Elliot 5 Wave pattern as talked about last weekend. Notice how the 4th wave (corrective wave) found support near its 200 Day EMA (green line) which has led to the final upward 5th wave. Of course the big question is how much higher will the S&P 500 go before the final 5th wave peaks leading to an ABC type correction?
Once again a brief review of a Elliot Wave 5 Wave Pattern shows that waves 1, 3 and 5 are upward moves with wave 3 lasting the longest while wave 1 and 5 are of short duration. Meanwhile waves 2 and 4 are corrective waves. Also notice that once the final upward 5th wave ends completing the 5 Wave pattern this is then followed by an ABC type correction.
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