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Saturday, April 05, 2008 7:20:00 PM
Amateur Investors Weekend Stock Market Analysis (4/5/08)
http://www.amateur-investor.net/Weekend_Market_Analysis_April_5_08.htm
One thing I haven’t talked about recently has been the inverse relationship between the price of Crude Oil and the Dow over the past few years. As we have seen when the price of Crude Oil has risen significantly (points B to A) the Dow has gone through a correction (points C to D) and when the price of Crude Oil has gone through a correction (points A to B) the Dow has rallied (points D to C). If the market is going to continue to move higher over the next several weeks the price of Crude Oil will either having to trade nearly sideways or go through a significant correction. Meanwhile if the price of Crude Oil were to make another significant move higher above the $110 level then that could put an abrupt end to this current rally that began with the lows on March 17th.
As far as the major averages if the Dow continues to follow through to the upside its first area of potential resistance would be at its 40 Week EMA (green line) near 12800. If the Dow can rise above its 40 Week EMA then expect a rise back to either its 50% Retracement Level (calculated from the October high to the March low) near 12900 (point E) or its 61.8% Retracement Level around 13200 (point F). Meanwhile support should occur at or above the Dow’s 10 Week EMA (blue line) which is currently nearing the 12400 level if it goes through a pullback.
The Nasdaq is still exhibiting a Double Bottom pattern and if it continues to follow through to the upside over the next few weeks look for potential resistance either at its 38.2% Retracement Level near 2425 (point G) or at its 40 Week EMA (green line) near 2450. Meanwhile support should occur at or above the Nasdaq’s 10 Week EMA (blue line) which is around 2320 if it goes through a pullback.
As far as the S&P 500 it's also exhibiting a Double Bottom pattern and encountered some resistance on Friday at its 38.2% Retracement Level near 1380 (calculated from the October high to the March low). If the S&P 500 continues to rally look for its next area of resistance in the 1415 to 1420 range which corresponds to its 40 Week EMA (green line) and 50% Retracement Level (point H). Meanwhile support in the S&P 500 should be at or above its 10 Week EMA (blue line) which is around 1345 if it goes through a pullback phase.
As talked about in the beginning the key thing to watch in the weeks ahead is the price of Crude Oil as any significant move lower or higher will likely have a substantial impact on the major averages going forward.
http://www.amateur-investor.net/Weekend_Market_Analysis_April_5_08.htm
One thing I haven’t talked about recently has been the inverse relationship between the price of Crude Oil and the Dow over the past few years. As we have seen when the price of Crude Oil has risen significantly (points B to A) the Dow has gone through a correction (points C to D) and when the price of Crude Oil has gone through a correction (points A to B) the Dow has rallied (points D to C). If the market is going to continue to move higher over the next several weeks the price of Crude Oil will either having to trade nearly sideways or go through a significant correction. Meanwhile if the price of Crude Oil were to make another significant move higher above the $110 level then that could put an abrupt end to this current rally that began with the lows on March 17th.
As far as the major averages if the Dow continues to follow through to the upside its first area of potential resistance would be at its 40 Week EMA (green line) near 12800. If the Dow can rise above its 40 Week EMA then expect a rise back to either its 50% Retracement Level (calculated from the October high to the March low) near 12900 (point E) or its 61.8% Retracement Level around 13200 (point F). Meanwhile support should occur at or above the Dow’s 10 Week EMA (blue line) which is currently nearing the 12400 level if it goes through a pullback.
The Nasdaq is still exhibiting a Double Bottom pattern and if it continues to follow through to the upside over the next few weeks look for potential resistance either at its 38.2% Retracement Level near 2425 (point G) or at its 40 Week EMA (green line) near 2450. Meanwhile support should occur at or above the Nasdaq’s 10 Week EMA (blue line) which is around 2320 if it goes through a pullback.
As far as the S&P 500 it's also exhibiting a Double Bottom pattern and encountered some resistance on Friday at its 38.2% Retracement Level near 1380 (calculated from the October high to the March low). If the S&P 500 continues to rally look for its next area of resistance in the 1415 to 1420 range which corresponds to its 40 Week EMA (green line) and 50% Retracement Level (point H). Meanwhile support in the S&P 500 should be at or above its 10 Week EMA (blue line) which is around 1345 if it goes through a pullback phase.
As talked about in the beginning the key thing to watch in the weeks ahead is the price of Crude Oil as any significant move lower or higher will likely have a substantial impact on the major averages going forward.
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