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Sunday, December 23, 2007 5:11:36 PM
Amateur Investors Weekend Stock Market Analysis (12/22/07)
http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_22_07.htm
Since 1943 each year prior to a Presidential Election Year the Dow has finished the year with a positive return as shown in the table below. So far in 2007 the Dow is up nearly 8% for the year and unless there is big sell off next week which is highly unlikely it appears the pattern that has been in place since 1943 will continue.
Dow Yearly Performance prior to a Presidential Election Year (1943-2007)
As far as the major averages the Dow has risen back above its 50 Day EMA (blue line) and closed on Friday near its 50% Retracement Level (calculated from the early October high to the late November low). If the Dow continues to rally into the end of the month look for upside resistance to develop at its 61.8% Retracement Level around 13630 (point A).
The Nasdaq has also rallied back above its 50 Day EMA (blue line) and is nearing its 50% Retracement Level around 2700 (point B). If the Nasdaq can rise above the 2700 level then its next area of upside resistance would be at its 61.8% Retracement Level near 2735 (point C) which is where it stalled out at just a few weeks ago.
The S&P 500 just like the Dow and Nasdaq was able to rise back above its 50 Day EMA (blue line) on Friday as well. If the S&P 500 can break above its 50% Retracement Level near 1490 (point D) then its next area of upside resistance would be at its 61.8% Retracement Level around 1510 (point E).
Meanwhile as I mentioned last weekend keep a close eye on the Russell 2000. For the 4th time since July the Russell 2000 has held support near the 735 level and if the current rally is going to continue it must rise above its 40 Week EMA (blue line) which is where it stalled out at just over a week ago (point F).
As mentioned above the Russell 2000 has a key support area near 735 which coincides with its longer term 23.6% Retracement Level (calculated from the late 2002 low to the June 2007 high). If the Russell 2000 were to eventually drop below its 23.6% Retracement that would signal a change in longer term direction which has been upward since the late 2002 low.
Finally when looking for stocks to invest in focus on those with decent Sales and Earnings Growth that are developing a favorable chart pattern such as the "Cup an Handle" pattern.
For example BYI formed a 3 1/2 Year Cup from 2004 thru the Summer of 2007. BYI then developed a 5 Week Handle (H) from late August into September which was when I started to focus on it. BYI then broke out in late September and has gained nearly 50% since then and has been one of the market leaders the past few months.
http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_22_07.htm
Since 1943 each year prior to a Presidential Election Year the Dow has finished the year with a positive return as shown in the table below. So far in 2007 the Dow is up nearly 8% for the year and unless there is big sell off next week which is highly unlikely it appears the pattern that has been in place since 1943 will continue.
Dow Yearly Performance prior to a Presidential Election Year (1943-2007)
As far as the major averages the Dow has risen back above its 50 Day EMA (blue line) and closed on Friday near its 50% Retracement Level (calculated from the early October high to the late November low). If the Dow continues to rally into the end of the month look for upside resistance to develop at its 61.8% Retracement Level around 13630 (point A).
The Nasdaq has also rallied back above its 50 Day EMA (blue line) and is nearing its 50% Retracement Level around 2700 (point B). If the Nasdaq can rise above the 2700 level then its next area of upside resistance would be at its 61.8% Retracement Level near 2735 (point C) which is where it stalled out at just a few weeks ago.
The S&P 500 just like the Dow and Nasdaq was able to rise back above its 50 Day EMA (blue line) on Friday as well. If the S&P 500 can break above its 50% Retracement Level near 1490 (point D) then its next area of upside resistance would be at its 61.8% Retracement Level around 1510 (point E).
Meanwhile as I mentioned last weekend keep a close eye on the Russell 2000. For the 4th time since July the Russell 2000 has held support near the 735 level and if the current rally is going to continue it must rise above its 40 Week EMA (blue line) which is where it stalled out at just over a week ago (point F).
As mentioned above the Russell 2000 has a key support area near 735 which coincides with its longer term 23.6% Retracement Level (calculated from the late 2002 low to the June 2007 high). If the Russell 2000 were to eventually drop below its 23.6% Retracement that would signal a change in longer term direction which has been upward since the late 2002 low.
Finally when looking for stocks to invest in focus on those with decent Sales and Earnings Growth that are developing a favorable chart pattern such as the "Cup an Handle" pattern.
For example BYI formed a 3 1/2 Year Cup from 2004 thru the Summer of 2007. BYI then developed a 5 Week Handle (H) from late August into September which was when I started to focus on it. BYI then broke out in late September and has gained nearly 50% since then and has been one of the market leaders the past few months.
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