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Tuesday, April 06, 2004 9:51:26 PM
Amateur Investor Mid Week Market Analysis (4/6/04)
The market has made a nice run since making a bottom 9 trading days ago but has become rather overbought so it wasn't to surprising to see some minor selling pressure develop today. Also remember earnings season will be picking up as some of the heavyweights start reporting which could increase the volatility in the market over the next several days.
As far as the major averages if the Dow pulls back some I would look for initial support at its 23.6% Retracement Level near 10440 (calculated from the late March low to its recent high) or at its 50 Day EMA (blue line) near 10375. To the upside the Dow will likely encounter resistance at its previous high made in February near 10750.
The Nasdaq came under some selling pressure today and if it continues to pull back I would look for initial support at its 23.6% Retracement Level near 2040 (calculated from the late March low to its recent high). To the upside the Nasdaq will likely encounter resistance at its previous high made in January near 2155
The S&P 500 also cam under some minor selling pressure today and if it pulls back should find initial support at its 23.6% Retracement Level near 1135 (calculated from the late March low to its recent high). To the upside look for resistance at the S&P 500's early March high near 1163.
Meanwhile continue to watch the Semiconductor Holders (SMH) closely over the next few days. The SMH's really need to hold support in the 40.25 to 40.50 area which coincides with their 50 Day and 100 Day EMA's and 38.2% Retracement Level calculated from the January high to the late March low. If the SMH's drop below 40.25 this could spell potential trouble for the market so keep a close eye on them the rest of this week.
Finally when scanning for stocks to put on your watch list make sure to notice what type of chart pattern they are exhibiting. Although I talk about the "Cup and Handle" pattern a lot another pattern to look for is the "Flat Base". A "Flat Base" develops as a stock gets stuck in a trading range for a significant period of time before breaking out. An example is AMED which had developed an 8 week "Flat Base" pattern before breaking out in early February. Notice that AMED traded between $14 and $17 as it formed its "Flat Base" pattern.
The market has made a nice run since making a bottom 9 trading days ago but has become rather overbought so it wasn't to surprising to see some minor selling pressure develop today. Also remember earnings season will be picking up as some of the heavyweights start reporting which could increase the volatility in the market over the next several days.
As far as the major averages if the Dow pulls back some I would look for initial support at its 23.6% Retracement Level near 10440 (calculated from the late March low to its recent high) or at its 50 Day EMA (blue line) near 10375. To the upside the Dow will likely encounter resistance at its previous high made in February near 10750.
The Nasdaq came under some selling pressure today and if it continues to pull back I would look for initial support at its 23.6% Retracement Level near 2040 (calculated from the late March low to its recent high). To the upside the Nasdaq will likely encounter resistance at its previous high made in January near 2155
The S&P 500 also cam under some minor selling pressure today and if it pulls back should find initial support at its 23.6% Retracement Level near 1135 (calculated from the late March low to its recent high). To the upside look for resistance at the S&P 500's early March high near 1163.
Meanwhile continue to watch the Semiconductor Holders (SMH) closely over the next few days. The SMH's really need to hold support in the 40.25 to 40.50 area which coincides with their 50 Day and 100 Day EMA's and 38.2% Retracement Level calculated from the January high to the late March low. If the SMH's drop below 40.25 this could spell potential trouble for the market so keep a close eye on them the rest of this week.
Finally when scanning for stocks to put on your watch list make sure to notice what type of chart pattern they are exhibiting. Although I talk about the "Cup and Handle" pattern a lot another pattern to look for is the "Flat Base". A "Flat Base" develops as a stock gets stuck in a trading range for a significant period of time before breaking out. An example is AMED which had developed an 8 week "Flat Base" pattern before breaking out in early February. Notice that AMED traded between $14 and $17 as it formed its "Flat Base" pattern.
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