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Sunday, November 08, 2009 12:14:15 AM
Amateur Investors Weekend Stock Market Analysis (11/7/09)
http://www.amateur-investor.net/Weekend_Market_Analysis_Nov_7_09.htm
Next week looks like a pivotal week for the major averages. The Dow has been acting the best lately as it found support right at its 50 Day EMA (blue line) and is attempting to make a run at its previous high just above 10100.
It looks to me one of two things may occur in the Dow. The bullish scenario is that it rises above its previous high and makes one more higher high with resistance coming in at 10350 (point A) which is the 50% Retrace from the October 2007 high to the March 2009 low.
Meanwhile the more bearish scenario is that the Dow will rally back to its previous high just above 10100 and then stall out leading to the potential development of a Double Top pattern similar to what has recently occurred in the Transportation Index (TRAN).
As far as the other major averages the Nasdaq has risen back above its 50 Day EMA (blue line) however it looks like it might be developing a potential bearish looking Head and Shoulders Top pattern. If that is the case I would look for the 2nd Shoulder to potentially develop near 2127 which is the 61.8% Retrace from the most recent high to the low made at 2024.
Meanwhile the S&P 500 has also risen back above its 50 Day EMA (blue line) however just like the Nasdaq it could be developing a potential bearish looking Head and Shoulders Top pattern as well. If that is the case I would expect the 2nd Shoulder to form in the 1073 to 1080 range. 1073 is the 61.8% Retrace from 1101 to 1029 while 1080 is where the 1st Shoulder resides at.
Keep in mind that doesn't mean these patterns will end up following through however it is something to be aware of over the next few weeks.
Finally further upside or downside movement in the market may depend on the action in the US Dollar (USD) as we continue to see an inverse relationship between the USD and the major averages. When the USD has fallen (points B to C) the S&P 500 has usually risen (points D to E) and when the USD has rallied (points C to B) the S&P 500 has generally fallen (points E to D).
Furthermore you can also see the USD has been stuck in a downward channel (yellow lines) since mid June which has been a positive for the major averages. This past week the USD once again tested the upper boundary of this channel (point F) and came under selling pressure which led to a rally in the market. The question is will it now make another move lower and eventually test the bottom of the downward channel or will it reverse and finally breakout of its downward channel which it has been unable to do for the last several weeks?
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_Nov_7_09.htm
Next week looks like a pivotal week for the major averages. The Dow has been acting the best lately as it found support right at its 50 Day EMA (blue line) and is attempting to make a run at its previous high just above 10100.
It looks to me one of two things may occur in the Dow. The bullish scenario is that it rises above its previous high and makes one more higher high with resistance coming in at 10350 (point A) which is the 50% Retrace from the October 2007 high to the March 2009 low.
Meanwhile the more bearish scenario is that the Dow will rally back to its previous high just above 10100 and then stall out leading to the potential development of a Double Top pattern similar to what has recently occurred in the Transportation Index (TRAN).
As far as the other major averages the Nasdaq has risen back above its 50 Day EMA (blue line) however it looks like it might be developing a potential bearish looking Head and Shoulders Top pattern. If that is the case I would look for the 2nd Shoulder to potentially develop near 2127 which is the 61.8% Retrace from the most recent high to the low made at 2024.
Meanwhile the S&P 500 has also risen back above its 50 Day EMA (blue line) however just like the Nasdaq it could be developing a potential bearish looking Head and Shoulders Top pattern as well. If that is the case I would expect the 2nd Shoulder to form in the 1073 to 1080 range. 1073 is the 61.8% Retrace from 1101 to 1029 while 1080 is where the 1st Shoulder resides at.
Keep in mind that doesn't mean these patterns will end up following through however it is something to be aware of over the next few weeks.
Finally further upside or downside movement in the market may depend on the action in the US Dollar (USD) as we continue to see an inverse relationship between the USD and the major averages. When the USD has fallen (points B to C) the S&P 500 has usually risen (points D to E) and when the USD has rallied (points C to B) the S&P 500 has generally fallen (points E to D).
Furthermore you can also see the USD has been stuck in a downward channel (yellow lines) since mid June which has been a positive for the major averages. This past week the USD once again tested the upper boundary of this channel (point F) and came under selling pressure which led to a rally in the market. The question is will it now make another move lower and eventually test the bottom of the downward channel or will it reverse and finally breakout of its downward channel which it has been unable to do for the last several weeks?
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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