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Sunday, September 27, 2009 7:41:19 PM
Amateur Investors Weekend Market Analysis (9/26/09)
http://www.amateur-investor.net/Weekend_Market_Analysis_Sep_26_09.htm
The major averages are very overextended in both price and time so a more substantial pullback is certainly possible at any time much like occurred from mid June through mid July. The chart of the Dow shows it's still pretty far above its upper trend line that connects the March low with the July low. At some point I would expect a retest of either the 50 Day EMA (blue line) which is approaching 9400 or the upward trend line which is nearing 9200.
As for the Nasdaq notice how it held support in earlier this month (point A) right along its upward trend line (black line) connecting the March low with the July low. Currently the upward trend line is nearing 2040 while the 50 day EMA (blue line) is around 2010 so those will be some initial support levels to watch if a more substantial pullback occurs in the Nasdaq.
The S&P 500's upward trend line (black line) connecting the March low with the July low is just above 1000 which is close to the 50 Day EMA (blue line) of 1010 as well. Thus if a more substantial pullback were to occur I would look for a potential retest of the longer term upward trend line.
Meanwhile a key thing to watch in the longer term is the 12 Month EMA (yellow line). Remember back in 2003 once the S&P 500 rose above its 12 Month EMA it was able to hold support above it on a Monthly Closing basis all the way through late 2007. Notice each time the S&P 500 dropped below its 12 Month EMA (points A) it was able to close back above it by the end of the month. Right now the 12 Month EMA is at 992 so that is a key level to watch over the next few months. Also note that the early September low was at 992 so it's probably not a coincidence that the 12 Month EMA is being watch by the Institutional Money that controls the market.
Finally last week I showed you an Inflation Adjusted Chart of the S&P 500. Many people have been wondering why the market made a bottom in March. When you look at a longer term Inflation Adjusted Chart notice that the S&P 500 made a Cyclical Bull Market high in 1968 which was in the mid 660's (point B). Meanwhile back in early March of this year the S&P 500 bottomed at 667 (point C) so I don't think this happened by accident as there was a key long term support level in the mid 660's based on the Inflation Adjusted values.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to the following products.
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's and SPY's.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account.
3. The "End of Month Strategy". This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy.
http://www.amateur-investor.net/Weekend_Market_Analysis_Sep_26_09.htm
The major averages are very overextended in both price and time so a more substantial pullback is certainly possible at any time much like occurred from mid June through mid July. The chart of the Dow shows it's still pretty far above its upper trend line that connects the March low with the July low. At some point I would expect a retest of either the 50 Day EMA (blue line) which is approaching 9400 or the upward trend line which is nearing 9200.
As for the Nasdaq notice how it held support in earlier this month (point A) right along its upward trend line (black line) connecting the March low with the July low. Currently the upward trend line is nearing 2040 while the 50 day EMA (blue line) is around 2010 so those will be some initial support levels to watch if a more substantial pullback occurs in the Nasdaq.
The S&P 500's upward trend line (black line) connecting the March low with the July low is just above 1000 which is close to the 50 Day EMA (blue line) of 1010 as well. Thus if a more substantial pullback were to occur I would look for a potential retest of the longer term upward trend line.
Meanwhile a key thing to watch in the longer term is the 12 Month EMA (yellow line). Remember back in 2003 once the S&P 500 rose above its 12 Month EMA it was able to hold support above it on a Monthly Closing basis all the way through late 2007. Notice each time the S&P 500 dropped below its 12 Month EMA (points A) it was able to close back above it by the end of the month. Right now the 12 Month EMA is at 992 so that is a key level to watch over the next few months. Also note that the early September low was at 992 so it's probably not a coincidence that the 12 Month EMA is being watch by the Institutional Money that controls the market.
Finally last week I showed you an Inflation Adjusted Chart of the S&P 500. Many people have been wondering why the market made a bottom in March. When you look at a longer term Inflation Adjusted Chart notice that the S&P 500 made a Cyclical Bull Market high in 1968 which was in the mid 660's (point B). Meanwhile back in early March of this year the S&P 500 bottomed at 667 (point C) so I don't think this happened by accident as there was a key long term support level in the mid 660's based on the Inflation Adjusted values.
Signup for a "Free 4 Week Trial Membership" or save up to 50% on a Premium Membership and you will have access to the following products.
1. "ETF Daily Buy and Short Signals" which can be used to trade the DIA's, QQQQ's and SPY's.
2. "401K/Thrift Savings Plan (TSP) Timing Service" which can be used to help improve your return in your 401k/TSP Account.
3. The "End of Month Strategy". This Strategy focuses on the typical End of Month markup by the Institutional Money.
4. "Stocks to Buy List" which can be used with either our Short Term Strategy or Long Term Strategy.
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