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Saturday, July 26, 2008 6:18:19 PM
Amateur Investors Weekend Stock Market Analysis (7/26/08)
http://www.amateur-investor.net/Weekend_Market_Analysis_July_26_08.htm
The major averages stalled out at key upside resistance areas on Wednesday and then got sold off pretty hard on Thursday before bouncing some on Friday. The Dow stalled out right at its 38.2% Retracement Level (calculated from the May high to the July 15th low) near 11700 (point A). If the Dow can hold support near Friday's intra day low around 11325 early next week then we may see at least one more move higher through the first week of August. The next levels of upside resistance above 11700 would either be at the Dow's 50 Day EMA (blue line) near 11800 or at its 50% Retracement Level just below 12000 (point B).
As for the the Nasdaq it stalled out on Wednesday right at its 50 Day EMA (blue line) near 2350. If the Nasdaq can hold support early next week around the 2280 level then it could make at least one more move higher with the next level of significant upside resistance near 2425 (point C) which corresponds to its 200 Day EMA (green line) and 38.2% Retracement Level calculated from the late October 2007 high to the low made in mid March.
The S&P 500 just like the Dow stalled out at its 38.2% Retracement Level (calculated from the May high to the July 15th low) near 1290 (point D). If the S&P 500 can hold support early next week near 1250 then it may make at least one more move higher with the next area of upside resistance above 1290 either at its 50 Day EMA (blue line) near 1305 or at its 50% Retracement Level around 1320 (point E).
Meanwhile for those watching the price of Crude Oil further action in the major averages may depend on what the price of Crude Oil does. As we have seen in the past there basically has been an inverse relationship between the price of Crude Oil and the Dow. When the price of Crude Oil has risen (points F to G) the Dow has generally fallen (points H to I) and when the price of Crude Oil has fallen (points G to F) the Dow has risen (points I to H).
As you can see below the price of Crude Oil had risen way above the top of its upward trending channel (black lines) so it was due for a correction as it had gone from the mid $80's to the upper $140's in just 5 months. In the near term the price of Crude Oil may drop back to the top off its upward channel near the $120 level so this will be a key level to watch next week. If the price of Crude Oil stabilizes near the 120 level and then begins to rise again this could put a quick end to the rally that began with the July 15th lows. On the other hand if the price of Crude Oil were to drop below $120 then the next area of support would be at its 40 Week EMA (blue line) just above 110 which would likely help the major averages move higher over the next week or two.
http://www.amateur-investor.net/Weekend_Market_Analysis_July_26_08.htm
The major averages stalled out at key upside resistance areas on Wednesday and then got sold off pretty hard on Thursday before bouncing some on Friday. The Dow stalled out right at its 38.2% Retracement Level (calculated from the May high to the July 15th low) near 11700 (point A). If the Dow can hold support near Friday's intra day low around 11325 early next week then we may see at least one more move higher through the first week of August. The next levels of upside resistance above 11700 would either be at the Dow's 50 Day EMA (blue line) near 11800 or at its 50% Retracement Level just below 12000 (point B).
As for the the Nasdaq it stalled out on Wednesday right at its 50 Day EMA (blue line) near 2350. If the Nasdaq can hold support early next week around the 2280 level then it could make at least one more move higher with the next level of significant upside resistance near 2425 (point C) which corresponds to its 200 Day EMA (green line) and 38.2% Retracement Level calculated from the late October 2007 high to the low made in mid March.
The S&P 500 just like the Dow stalled out at its 38.2% Retracement Level (calculated from the May high to the July 15th low) near 1290 (point D). If the S&P 500 can hold support early next week near 1250 then it may make at least one more move higher with the next area of upside resistance above 1290 either at its 50 Day EMA (blue line) near 1305 or at its 50% Retracement Level around 1320 (point E).
Meanwhile for those watching the price of Crude Oil further action in the major averages may depend on what the price of Crude Oil does. As we have seen in the past there basically has been an inverse relationship between the price of Crude Oil and the Dow. When the price of Crude Oil has risen (points F to G) the Dow has generally fallen (points H to I) and when the price of Crude Oil has fallen (points G to F) the Dow has risen (points I to H).
As you can see below the price of Crude Oil had risen way above the top of its upward trending channel (black lines) so it was due for a correction as it had gone from the mid $80's to the upper $140's in just 5 months. In the near term the price of Crude Oil may drop back to the top off its upward channel near the $120 level so this will be a key level to watch next week. If the price of Crude Oil stabilizes near the 120 level and then begins to rise again this could put a quick end to the rally that began with the July 15th lows. On the other hand if the price of Crude Oil were to drop below $120 then the next area of support would be at its 40 Week EMA (blue line) just above 110 which would likely help the major averages move higher over the next week or two.
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