The Weekly Report For October 11th - October 15th, 2010
To the surprise of many traders,
the bulls were able to shake off Monday's weakness and send
the indexes higher. As you can see from the charts below, prices
remained in a fairly narrow range, but were slowly able to creap
higher to finish at new rally-highs on Friday; thanks in part to an
upbeat earnings annoucement from
Alcoa(NYSE:AA). Given the strength that
has been shown in the financial markets since early September, many
traders are now worried of a possible top, and while Friday's close
will certainly mark a short-term high, the markets remain in a
holding pattern above some interesting support levels.
The S&P500 as represented by
the
S&P
500
SPDRS(NYSE:SPY) ETF cleared its base a couple of
weeks ago and has held above priorresistancenear $113 for virtually the entire
time. Despite a few blips, the overall action is constructive as
the bulls have given up very little ground since setting a higher
high earlier in September. The $112-$113 area is starting to firm
up as support and should be an important level to watch moving
forward. Despite the overall strength, the possibility does exist
for a steeper pullback and the $110.50 level may be another area to
watch on weakness. This is approximately where the 50-day moving
average is and also a level that has seen much trading
volume.
The
Diamonds Trust, Series 1(NYSE:DIA) ETF which tracks theDow Jones Industrial Averagealso held above its breakout area
and moved back about 110 for the first since May. In the event
that the bulls lose their conviction, it is certainly a possibility
that DIA will pull back and the primary level to watch would be
thebreakoutarea near $107. If DIA continues to
trade sideways, then this week's high would be the clear level to
monitor. This was the area where the markets clearly saw sellers,
and a move above this level could catch some bears off
guard.
Tech stocks as represented by the
PowersharesQQQ ETF(Nasdaq:QQQQ) were able to bounce back this
week. Overall QQQQ has not given up much ground since the start of
the rally and it remains above a prior resistance level near
$48.75. This would be a level to watch on any short-term weakness,
but the more important level to watch would be the $47 level which
was cleared in early September.
The
small capsas
represented by the
iShares
Russell 2000 Index(NYSE:IWM) finally followed its market peers
in setting a higher high this week, as IWM finally got above the
$67.50 level, which was proving to be quite stubborn. As you
can see from the chart, IWM managed to hold above it and finished
the week at a rally high. This level held on a few pullbacks during
the week, and will be an important area to monitor next week. A
failure to hold this level could end up leading to IWM trading back
towards the middle of its base near $64-65.
Bottom Line
Despite some sign of weakness, the markets remain
above prior resistance levels and have given up very little ground
over the past couple of weeks. The tech stocks are the area showing
the most weakness, but this should be expected as this group led
the way higher and is the most tired. The next couple of weeks will
be very important as a light volume pullback could set the stage
for a powerful end-of-year rally. However, October has certainly
accounted for some scary market pullbacks in the past, which hasn't
really been an issue yet this month. Traders should monitor the
recent breakout areas as any weakness that drives the major index
ETFs below these levels would be a clear warning signal. If these
levels hold, the benefit of the doubt would continue to lie with
the bulls.
Posted by stevedfw on 10th of Oct 2010 at 03:52 pm
I believe Steve has pointed this out before on other
charts. He usually draws a square/rectangle around
them. On the QQQQ chart the price/time sideways
activity is pretty interesting for comparing periods Dec09/Jan10
$46.39, Apr/May10 $50.44 and now Sep/Oct10 $49.95. I guess we
will see.
Title: Chart Advisor Weekly Report
Posted by curtis on 10th of Oct 2010 at 01:54 pm
The Weekly Report For October 11th - October 15th, 2010
To the surprise of many traders, the bulls were able to shake off Monday's weakness and send the indexes higher. As you can see from the charts below, prices remained in a fairly narrow range, but were slowly able to creap higher to finish at new rally-highs on Friday; thanks in part to an upbeat earnings annoucement from Alcoa(NYSE: AA ). Given the strength that has been shown in the financial markets since early September, many traders are now worried of a possible top, and while Friday's close will certainly mark a short-term high, the markets remain in a holding pattern above some interesting support levels .
The S&P500 as represented by the S&P 500 SPDRS (NYSE: SPY ) ETF cleared its base a couple of weeks ago and has held above prior resistance near $113 for virtually the entire time. Despite a few blips, the overall action is constructive as the bulls have given up very little ground since setting a higher high earlier in September. The $112-$113 area is starting to firm up as support and should be an important level to watch moving forward. Despite the overall strength, the possibility does exist for a steeper pullback and the $110.50 level may be another area to watch on weakness. This is approximately where the 50-day moving average is and also a level that has seen much trading volume.
The Diamonds Trust, Series 1(NYSE: DIA ) ETF which tracks the Dow Jones Industrial Average also held above its breakout area and moved back about 110 for the first since May. In the event that the bulls lose their conviction, it is certainly a possibility that DIA will pull back and the primary level to watch would be the breakout area near $107. If DIA continues to trade sideways, then this week's high would be the clear level to monitor. This was the area where the markets clearly saw sellers, and a move above this level could catch some bears off guard.
Tech stocks as represented by the PowersharesQQQ ETF(Nasdaq: QQQQ ) were able to bounce back this week. Overall QQQQ has not given up much ground since the start of the rally and it remains above a prior resistance level near $48.75. This would be a level to watch on any short-term weakness, but the more important level to watch would be the $47 level which was cleared in early September.
The small capsas represented by the iShares Russell 2000 Index (NYSE: IWM ) finally followed its market peers in setting a higher high this week, as IWM finally got above the $67.50 level, which was proving to be quite stubborn. As you can see from the chart, IWM managed to hold above it and finished the week at a rally high. This level held on a few pullbacks during the week, and will be an important area to monitor next week. A failure to hold this level could end up leading to IWM trading back towards the middle of its base near $64-65.
Bottom Line
Despite some sign of weakness, the markets remain above prior resistance levels and have given up very little ground over the past couple of weeks. The tech stocks are the area showing the most weakness, but this should be expected as this group led the way higher and is the most tired. The next couple of weeks will be very important as a light volume pullback could set the stage for a powerful end-of-year rally. However, October has certainly accounted for some scary market pullbacks in the past, which hasn't really been an issue yet this month. Traders should monitor the recent breakout areas as any weakness that drives the major index ETFs below these levels would be a clear warning signal. If these levels hold, the benefit of the doubt would continue to lie with the bulls.
I believe Steve has pointed
Posted by stevedfw on 10th of Oct 2010 at 03:52 pm
I believe Steve has pointed this out before on other charts. He usually draws a square/rectangle around them. On the QQQQ chart the price/time sideways activity is pretty interesting for comparing periods Dec09/Jan10 $46.39, Apr/May10 $50.44 and now Sep/Oct10 $49.95. I guess we will see.
Article sounds kinda bullish...
Posted by vdonato on 10th of Oct 2010 at 03:26 pm
Which blog poster is he
Posted by darnelds on 10th of Oct 2010 at 04:37 pm
Which blog poster is he supposed to check with? And why?