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Saturday, February 02, 2008 4:01:15 PM
Amateur Investors Weekend Stock Market Analysis (2/2/08)
http://www.amateur-investor.net/Weekend_Market_Analysis_Feb_2_08.htm
Since the low made on January 23rd the Dow has rallied around 1150 points or about 10%. The overall pattern looks similar to what occurred from mid October through early December as the Dow initially sold off (points A to B) which was then followed by a brief rally (points B to C). This was then followed by a larger downward move (points C to D) and then a 10 day rally in which the Dow gained over 1000 points (points D to E). Meanwhile from early December through the 3rd week of January a similar pattern has evolved as the Dow came under some selling pressure (points E to F) which was then followed by a brief oversold bounce (points F to G) and was then followed by another substantial move downward (points G to H). Meanwhile this has been followed a 1150 point rally in the Dow over the past 8 trading days. The most likely scenario to play out in the coming weeks is for the Dow to stall out either at its declining 50 Day EMA (green line) near 12900 or its declining 200 Day EMA (purple line) near 13100 which would then be followed by an eventual retest of the January 23rd low near 11630.
The Nasdaq made a bottom near 2200 and has rallied nearly 10% or just over 200 points in 8 trading days. Just like the Dow I expect the Nasdaq will eventually retest its January 23rd low at some point in the weeks ahead. However in the near term if it continues higher look for it to encounter resistance either at its 38.2% Retracement Level near 2450 or at its declining 50 Day EMA (green line) just below 2520.
As for the S&P 500 it has also rallied 10% or 125 points since the January 23d low and has risen above its declining 20 Day EMA (blue line). If the S&P 500 continues higher in the near term look for resistance to occur either at its declining 50 Day EMA (green line) near 1420 or at its declining 200 Day EMA (purple line) just above 1450. Just like the Dow and Nasdaq I expect in the coming weeks the S&P 500 will eventually retest its January 23rd low near 1270 once this oversold rally ends.
As I mentioned above I think the major averages may retest their January 23rd lows at some point in the coming weeks. One of the reasons I think this may happen is based on the % of Bearish Investment Advisor Sentiment which still hasn't reached an extreme level. Going back to the mid 1990's when the 3 week average of Bearish Investment Advisor Sentiment has risen at or above the 35% level (points I) this has signaled a nearing bottom followed by a substantial rally (20% or more) in the S&P 500 (points J to K). Currently the 3 week average of Bearish Investment Advisor Sentiment stands at 30% so this is one reason why I think the January 23rd lows may have to be retested or even broken before a significant bottom occurs.
http://www.amateur-investor.net/Weekend_Market_Analysis_Feb_2_08.htm
Since the low made on January 23rd the Dow has rallied around 1150 points or about 10%. The overall pattern looks similar to what occurred from mid October through early December as the Dow initially sold off (points A to B) which was then followed by a brief rally (points B to C). This was then followed by a larger downward move (points C to D) and then a 10 day rally in which the Dow gained over 1000 points (points D to E). Meanwhile from early December through the 3rd week of January a similar pattern has evolved as the Dow came under some selling pressure (points E to F) which was then followed by a brief oversold bounce (points F to G) and was then followed by another substantial move downward (points G to H). Meanwhile this has been followed a 1150 point rally in the Dow over the past 8 trading days. The most likely scenario to play out in the coming weeks is for the Dow to stall out either at its declining 50 Day EMA (green line) near 12900 or its declining 200 Day EMA (purple line) near 13100 which would then be followed by an eventual retest of the January 23rd low near 11630.
The Nasdaq made a bottom near 2200 and has rallied nearly 10% or just over 200 points in 8 trading days. Just like the Dow I expect the Nasdaq will eventually retest its January 23rd low at some point in the weeks ahead. However in the near term if it continues higher look for it to encounter resistance either at its 38.2% Retracement Level near 2450 or at its declining 50 Day EMA (green line) just below 2520.
As for the S&P 500 it has also rallied 10% or 125 points since the January 23d low and has risen above its declining 20 Day EMA (blue line). If the S&P 500 continues higher in the near term look for resistance to occur either at its declining 50 Day EMA (green line) near 1420 or at its declining 200 Day EMA (purple line) just above 1450. Just like the Dow and Nasdaq I expect in the coming weeks the S&P 500 will eventually retest its January 23rd low near 1270 once this oversold rally ends.
As I mentioned above I think the major averages may retest their January 23rd lows at some point in the coming weeks. One of the reasons I think this may happen is based on the % of Bearish Investment Advisor Sentiment which still hasn't reached an extreme level. Going back to the mid 1990's when the 3 week average of Bearish Investment Advisor Sentiment has risen at or above the 35% level (points I) this has signaled a nearing bottom followed by a substantial rally (20% or more) in the S&P 500 (points J to K). Currently the 3 week average of Bearish Investment Advisor Sentiment stands at 30% so this is one reason why I think the January 23rd lows may have to be retested or even broken before a significant bottom occurs.
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