AI
Saturday, May 01, 2004 3:17:03 PM
CYCLE Turn on/around May 9th
As mentioned in my previous cycle post with which this post replies, a turn date on the 26th was to ensue and I was looking for some downside to occur. Well we got our turn date and "some downside" was putting it lightly. Just an absolutely brutal week in which we lost 130-140pts in 5 consecutive trading days on the COMPQ, off a cliff you might say. I also mentioned a shift in dynamics where news driven issues as opposed to earns driven issues would take precedent, increased volatility as well as the pessimism and uncertainty it could create. Then we have the A/D issues, Up/Down Volume and New Highs vs Lows and the signals being sent from these indicators. As it turns out all of these added up and played a part in last weeks decline, not a bad call if I do say so myself. I am not so sure we are out of the woods yet either, but before I get into that let's review the Econ #'s for the week.
New & Existing Home Sales were up and with it so was Consumer Confidence, the Initial Jobless Claims fell again with Personal Income being flat to down. The GDP #'s were slightly up although much lower than expected and the Chicago PMI came in strong. Nothing unusual here, your generally mixed bag with the exception of the GDP and PMI which apparently carries some Job and Inflation data within it and seemed to play a part in capping the week with another strong downer day.
We have a full plate of Econ #'s for the week ahead starting with Auto/Truck Sales, Construction Spending, Factory Orders, Initial Jobless Claims followed by Nonfarm Payrolls and the Unemployment Rate. Then Wholesale Inventories and Consumer Credit. Oh, did I forget to mention some FedSpeak on Tuesday by everyones favorite FOMC Chairman? Yep, we get some of that too. Remember the volatility I mentioned, this week should be classic. A lot of stuff to cover in the week ahead.
So what can we expect for the week ahead? Well if charts are any indication there are a lot of things breaking down and I don't just mean in the trend sense of the word. Old support levels and 200DMA's are being revisited and broken with authority. The $NDX and $RUT which led the way up are now leading the way down, not pretty. With that said, I believe we may get a one, possibly 2 day relief bounce. Unfortunately I do not believe it will last and we will resume our downtrend into the following weekend. On the otherside of that weekend we have another Turn date scheduled for May 9th. Who knows, it may come early and before the weekend, otherwise it will more than likely come the week after (if not, then continuation down), but let's not get too far ahead of ourselves and see how the week plays out. Now for a chart...
3-Line Break?
Pattern: Continuation
Trend: Bearish
Reliability: Low
How to Identify it
Three long black days occur with consecutively lower closes
The fourth day opens lower, but closes above the open of the first day
What it Means
The white day drives prices back to where they were at the start of the pattern. If the bearish trend was strong before the pattern, then it should continue.
As mentioned in my previous cycle post with which this post replies, a turn date on the 26th was to ensue and I was looking for some downside to occur. Well we got our turn date and "some downside" was putting it lightly. Just an absolutely brutal week in which we lost 130-140pts in 5 consecutive trading days on the COMPQ, off a cliff you might say. I also mentioned a shift in dynamics where news driven issues as opposed to earns driven issues would take precedent, increased volatility as well as the pessimism and uncertainty it could create. Then we have the A/D issues, Up/Down Volume and New Highs vs Lows and the signals being sent from these indicators. As it turns out all of these added up and played a part in last weeks decline, not a bad call if I do say so myself. I am not so sure we are out of the woods yet either, but before I get into that let's review the Econ #'s for the week.
New & Existing Home Sales were up and with it so was Consumer Confidence, the Initial Jobless Claims fell again with Personal Income being flat to down. The GDP #'s were slightly up although much lower than expected and the Chicago PMI came in strong. Nothing unusual here, your generally mixed bag with the exception of the GDP and PMI which apparently carries some Job and Inflation data within it and seemed to play a part in capping the week with another strong downer day.
We have a full plate of Econ #'s for the week ahead starting with Auto/Truck Sales, Construction Spending, Factory Orders, Initial Jobless Claims followed by Nonfarm Payrolls and the Unemployment Rate. Then Wholesale Inventories and Consumer Credit. Oh, did I forget to mention some FedSpeak on Tuesday by everyones favorite FOMC Chairman? Yep, we get some of that too. Remember the volatility I mentioned, this week should be classic. A lot of stuff to cover in the week ahead.
So what can we expect for the week ahead? Well if charts are any indication there are a lot of things breaking down and I don't just mean in the trend sense of the word. Old support levels and 200DMA's are being revisited and broken with authority. The $NDX and $RUT which led the way up are now leading the way down, not pretty. With that said, I believe we may get a one, possibly 2 day relief bounce. Unfortunately I do not believe it will last and we will resume our downtrend into the following weekend. On the otherside of that weekend we have another Turn date scheduled for May 9th. Who knows, it may come early and before the weekend, otherwise it will more than likely come the week after (if not, then continuation down), but let's not get too far ahead of ourselves and see how the week plays out. Now for a chart...
3-Line Break?
Pattern: Continuation
Trend: Bearish
Reliability: Low
How to Identify it
Three long black days occur with consecutively lower closes
The fourth day opens lower, but closes above the open of the first day
What it Means
The white day drives prices back to where they were at the start of the pattern. If the bearish trend was strong before the pattern, then it should continue.
**Happy Trading**
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