Major indices posted the biggest gains since 2002

The Stock Market Week - 9/19/2008

In our previous publication on September 5th we suggested that "the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure". The recent financial events appear to be the worse in the history of US financial market so far. "America's economy is facing unprecedented challenges," president Bush declared in a press conference Friday. The crisis has forced 12 federally insured banks and thrifts into failure this year. Another 117 banks and thrifts were considered to be in trouble in the second quarter with the total assets of troubled banks tripling to $78 billion, according to the Federal Deposit Insurance Corp. On Monday September 15 week the Dow Jones Industrial Average lost 4.42%, this is the biggest loss since July 19, 2002 when Dow lost 4.6%. The Standard & Poor's 500 Index and Nasdaq Composite lost on Monday 4.71% and 4.94%; these are biggest losses since September 17, 2001 when they lost 4.92% and 6.83%. For the first tree days of last week the Dow Jones Industrial Average lost 7.11% while Standard & Poor's 500 Index and Nasdaq Composite lost 7.61% and 7.18%. These were the biggest losses since August 5, 2002 when major indices lost 7.93%, 8.45%, and 9.20% in three consecutive trading sessions. For the last two days of the week the Dow Jones Industrial Average gained 7.34% while Standard & Poor's 500 Index and Nasdaq Composite gained 8.53 % and 8.34 %. It was the biggest gain since October 11, 2002 when Dow Jones gained 7.74% while Nasdaq Composite gained 8.65%% in two consecutive trading sessions. For the week the Dow Jones Industrial Average gave back 33.55 points, or 0.29%. The Standard & Poor's 500 Index climbed 3.38 points, or 0.27%, while the Nasdaq Composite climbed 12.63 points, or 0.56%. After the government intervention, the Financial sector was the strongest sector last week followed by the Energy sector. The Basic Materials and Technology are the most oversold sectors while Processing Systems/Prods, Semiconductor - Memory Chips, and Semiconductor-Intgrtd Circ are among the most oversold industries.

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. The price retested the neckline and has resumed the long-term downtrend. The pattern should be close to completion, but the price did not reach the target yet. The price drop did not move weekly technical indicators into oversold area as usually happens at the end of the long-term downtrend.

Dow Jones Industrial Average - Long-Term Trend

Standard Poor's 500 Index Trend Analysis Standard & Poor's 500 Index is in a long-term down trend that started on 10/11/2007 at 1576.09. The chart is forming a falling channel pattern. The support line is around 1190, and the resistance line is near 1360. The third wave down is in progress now. It has started on 5/19/2008 and now it is forming the sub wave three down as well. According to this wave count, the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure. Both weekly and daily technical indicators are neutral. The downtrend is not completed yet. The price may spend some time in indecision area after the government intervention, but then the long-term downtrend may resume soon.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index is in a long-term uptrend since 2002. As we suggested previously, the price is forming a symmetric triangle chart pattern. A triangle pattern usually represents an area of indecision, where the direction of the movement is questioned. In a mature trend a triangle chart pattern usually appears as a reversal formation. Last week the triangle pattern had a breakdown with noticeable increase in volume. The price target is below 2000.

Nasdaq Composite Index - Long-Term Trend

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Dow Jones - head and shoulders pattern

The Stock Market Week - 9/5/2008

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 322.59 points, or 2.79%. The Standard Poor's 500 Index dropped 40.52 points, or 3.16%, while the Nasdaq Composite dropped 111.64 points, or 4.72%. The Financial sector was the strongest sector last week followed by the Consumer Staples sector. The Energy sector was the worst performing sector of the week followed by the Materials sector.

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. As we suggested in our earlier publications, the Dow Jones has retested the neckline. The short-term rally has reached 11,933.55 on August 11. This level was close to the Fibonacci 50% retracement level. Since August 11 the Dow Jones has resumed the long-term downtrend.

Dow Jones Industrial Average - Long-Term Trend

The short-term chart is forming a sharp falling channel. Both weekly and daily Williams' % Range (W%R) indicators are oversold while other technical indicators are neutral. Oversold W%R usually indicates that the recent chart slope is too steep and might not be sustainable.

Dow Jones Industrial Average - Short-Term Trend

Standard Poor's 500 Index Trend Analysis Standard & Poor's 500 Index is in a long-term down trend that started on 10/11/2007 at 1576.09. The chart is forming a falling channel pattern. The support line is around 1190, and the resistance line is near 1360. The third wave down is in progress now. It has started on 5/19/2008 and now it is forming the sub wave three down as well. According to this wave count, the S&P 500 is now in sub wave three of the third down wave. This sub wave is considered the worse in the five-wave structure. Both weekly and daily Williams' % Range (W%R) indicators are oversold while other technical indicators are neutral.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index is in a long-term uptrend since 2002. As we suggested previously, the price is forming a triangle chart pattern. A triangle pattern usually represents an area of indecision, where the direction of the movement is questioned. In a mature trend a triangle chart pattern usually appears as a reversal formation. Daily technical indicators are overbought.For several months the Nasdaq Composite index has been the strongest among the major US stock market indices. Last week Nasdaq dropped 4.72%, and was the weakest. The daily Williams#39; % Range is strongly oversold, while daily Lane#39;s Stochastic and weekly Williams#39; % Range is oversold. Price is near a long-term trend support.

Nasdaq Composite Index - Long-Term Trend

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Nasdaq is forming a triangle chart pattern

The Stock Market Week - 7/18/2008

It was a mixed week for the major markets. For the week the Dow Jones Industrial Average gave back 74.42 points, or 0.63%. The Standard Poor's 500 Index climbed 1.89 points, or 0.15%, while the Nasdaq Composite gained 38.42 points, or 1.59%. The Consumer Discretionary sector was the strongest sector last week followed by the Materials sector. The Financial sector was the worst performing sector of the week followed by the Utilities sector.

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. On July 11, when the Dow Jones was at 10,908.64, we suggested that price might retest the neckline before continuing the long-term downtrend. Last Monday the Dow Jones reached 11,933.55 level.

Dow Jones Industrial Average - Long-Term Trend

Both weekly and daily technical indicators are reset to natural. The short-term rally is still in progress. The Dow Jones Industrial Average closed on Friday at 11,659.90 - approximately 200 points above the short-term uptrend support level. The Fibonacci 50% retracement level is near 11954.

Dow Jones Industrial Average - Short-Term Trend

Standard Poor's 500 Index Trend Analysis Standard Poor#39;s 500 Index is in a long-term down trend that started on 10/11/2007 at 1576.09. The chart is forming a falling channel pattern. The support line is around 1190, and the resistance line is near 1365. The Fibonacci 50% retracement level is near 1320. The third wave started on 5/19/2008. The short-term rally, that we had anticipated, is in process now. 70 out of 500 S&P members have the downtrend resistance alert. The downtrend may resume soon.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index is in a long-term uptrend since 2002. The price is forming a triangle chart pattern. A triangle pattern usually represents an area of indecision, where the direction of the movement is questioned. In a mature trend a triangle chart pattern usually appears as a reversal formation. Daily technical indicators are overbought.

Nasdaq Composite Index - Long-Term Trend

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S&P 500 has formed a Bearish Advance Block pattern

The Stock Market Week - 7/18/2008

In our previous publication on June 13, we suggested that major market indices are oversold, and we expected a short-term rally soon. All there major indices had a sharp rally this week. For the week the Dow Jones Industrial Average gained 396.03 points, or 3.57%. The Standard Poor's 500 Index gained 21.19 points, or 1.71%, while the Nasdaq Composite gained 43.70 points, or 1.95%. Finally, after a long decline, the Financial sector became the strongest sector last week followed by the Consumer Discretionary sector. The Energy sector was the worst performing sector of the week followed by the Utilities sector.

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart has formed a head and shoulders pattern. This pattern is near completion. It is common for a head and shoulders pattern to retest the neckline. The neckline (around 11500) now becomes an important resistance level. The Dow Jones may retest this level, offering a second chance to sell, before moving down again.

Dow Jones Industrial Average - Long-Term Trend

Standard Poor's 500 Index Trend Analysis Standard Poor's 500 Index is in the long-term down trend that started on 10/11/2007 at 1576.09. The chart is forming a falling channel pattern. The support line is around 1200, and the resistance line is near 1375. The first down wave had five-wave structure, and it was completed on 3/17/2008 at 1256.98. Standard Poor's 500 Index is in the third down wave of the long-term down trend. The third wave started on 5/19/2008. The short-term rally, that we had anticipated, is in process now. The third wave down might not be completed yet, and it may resume soon. On Friday, Standard Poor's 500 Index has formed a Bearish Advance Block candlestick pattern.The Bearish Advance Block candlestick pattern is more meaningful during a mature uptrend. It is a sign of weakness, and it often precedes a meaningful price decline. A confirmation of the reversal on Monday might provide the needed proof that the short-term rally has reversed.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis The Nasdaq Composite index is retesting the long-term rising support line. As you can see in the chart below, this trend line served as a support line for five years, and Nasdaq Composite index was not able to break it. Every time the chart had touched the support line, the daily and weekly technical indicators had been in oversold area. Now for the first time weekly technical indicators are natural. It makes the support line much weaker. After the short-term rally that we anticipated last week, Nasdaq Composite index might retest the long-term support line once more and the weakened support line might be broken.

Nasdaq Composite Index - Long-Term Trend

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Dow Jones is forming a head and shoulders pattern

The Stock Market Week - 7/11/2008

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 188.00 points, or 1.67%. The Standard Poor's 500 Index dropped 23.41 points, or 1.85%, while the Nasdaq Composite gave back 6.30 points, or 0.28%.

Dow Jones Industrial Average Trend Analysis Dow Jones Industrial Average long-term chart is forming a head and shoulders pattern. The projected price decline for a head and shoulders pattern is usually found by measuring the distance from the neckline to the top of the head. This distance is then subtracted from the neckline to reach a price target. The calculation gives approximately 9000 as a rough long-term target. This price target looks very pessimistic now, and it should be considered with other technical indicators as well. Daily and weekly technical indicators are oversold. The neckline (around 11500) now becomes an important resistance level. The Dow Jones may retest this level before moving down to a 9000 long-term target.

Dow Jones Industrial Average - Long-Term Trend

Standard Poor's 500 Index Trend Analysis Standard Poor's 500 Index is in the long-term down trend that started on 10/11/2007 at 1576.09. Standard Poor' 500 Index lost already almost 20%. The first down wave had a five waves structure and was completed on 3/17/2008 at 1256.98. Standard Poor's 500 Index is in the third down wave of the long-term down trend. The third wave started on 5/19/2008 and may take five to six month to be complete. In the short-term all technical indicators are oversold. A short-term rally might be expected soon.

Standard Poor's 500 - Long-Term Trend

Nasdaq Composite Index Trend Analysis For the last several month the Nasdaq Composite index is the strongest among the major indices. It is retesting the long-term support line, while Dow Jones and Standard & Poor's 500 indices had already broken this line. The current falling channel looks strong, but daily and weekly technical indicators are oversold. The downtrend may pause for a while before breaking the long-term support around 44.

Nasdaq Composite Index - Long-Term Trend

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The QQQQ is forming a new falling channel

The Stock Market Week - 6/27/2008

All the major US indices were negative. The Dow Jones Industrial Average was the weakest among the major market indices. It closed on Friday at the lowest level since September 7, 2006. For the week the Dow Jones Industrial Average dropped 496.18 points, or 4.19%. The Standard Poor's 500 Index dropped 39.55 points, or 3.00%, while the Nasdaq Composite dropped 90.46 points, or 3.76%. The Energy sector was the strongest sector last week followed by the Health Care sector. The Financial sector was the worst performing sector of the week followed by the Industrial sector. The Conglomerates and Financial are the most oversold sectors, while Regional-Southeast Banks, Sporting Goods, Housewares Accessories, and Appliances are among the most oversold industries. The Basic Materials and Utilities are the most overvalued sectors, while Beverages-Brewers, Gas Utilities, Metals Fabrication, and Oil Gas Drilling/Explore are among the most overvalued industries.

Nasdaq Trend Analysis

In our previous QQQQ analysis on June 20th, we suggested that "the weekly Lane's Stochastic falls below 80% level, and %K line falls below %D. Both signs are usually considered as a sell signal". It was a negative week for the QQQQ. The QQQQ lost 3.73% for the week.

QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe. "This will probably not prove to be the final bottom" said billionaire George Soros, referring to the rally in stocks after JPMorgan Chase agreed to buy Bear Stearns on March 17. He added that the rebound might last six weeks to three months as the US moves closer to a recession.

QQQQ - Long-Term Trend

QQQQ Short-term technical analysis: Weekly rising channel (March 17 – June 5) is broken. The new falling channel is forming, and the price is near the channel support. Daily William's Percentage Range (W%R) and Lane's Stochastic (%D-Slow) are oversold. Broad market is oversold on daily and weekly bases. 133 members of Standard Poor's 500 Index are oversold, while only 4 overbought. The sharp decline might pause soon, and QQQQ may move up toward the weekly falling channel resistance. The next QQQQ long-term support is near 44.

QQQQ - Short-Term Trend

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For the week Nasdaq Composite dropped 1.97%

The Stock Market Week - 6/20/2008

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 464.66 points, or 3.78%. The Standard Poor's 500 Index dropped 42.10 points, or 3.10%, while the Nasdaq Composite dropped 48.41 points, or 1.97%. For the last several month the Nasdaq Composite index outperformed the Dow Jones and Standard Poor's 500 Indices. The Energy sector was the strongest sector last week followed by the Utilities sector. The Consumer Discretionary sector was the worst performing sector of the week followed by the Financial sector. Basic Materials is the most overbought sector followed by Utilities, while Gas Utilities, Metals Fabrication, and Oil Gas Pipelines are among the most overbought industries. The Financial is the most oversold sector followed by Consumer Goods, while Regional-Southeast Banks, Appliances, and House wares & Accessories are the most oversold industries.

Nasdaq Trend Analysis

It was a negative week for the QQQQ. The QQQQ lost 1.96% for the week. In our previous publication on May 30th, we suggested that the QQQQ downtrend might resume soon. The QQQQ had reached 50.61 on June 5th and turned down, loosing more than 6.3% since then.

QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe. "This will probably not prove to be the final bottom" said billionaire George Soros, referring to the rally in stocks after JPMorgan Chase agreed to buy Bear Stearns on March 17. He added that the rebound might last six weeks to three months as the US moves closer to a recession.

QQQQ - Long-Term Trend

QQQQ Short-term technical analysis: All weekly and daily technical indicators are neutral now. The weekly Lane's Stochastic falls below 80% level, and %K line falls below %D. Both signs are usually considered as a sell signal. Lane's Stochastic signals should be considered in conjunction with other factors. At this point the strength of the downtrend will show if scenario #1 or #2 is in progress.

QQQQ - Short-Term Trend

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The QQQQ is retesting the rising channel support

The Stock Market Week - 5/30/2008

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 158.69 points, or 1.27%. The Standard Poor's 500 Index gained 24.45 points, or 1.78%, while the Nasdaq Composite gained 77.99 points, or 3.19%. The Technology sector was the strongest sector last week followed by the Industrial sector. The Energy sector was the worst performing sector of the week followed by the Financial sector.

Nasdaq Trend Analysis

Last week we expected that the QQQQ might see a brief rebound or pause. It was a positive week for the QQQQ. The QQQQ raised 3.76% for the week.

QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe. "This will probably not prove to be the final bottom" said billionaire George Soros, referring to the rally in stocks after JPMorgan Chase agreed to buy Bear Stearns on March 17. He added that the rebound might last six weeks to three months as the US moves closer to a recession.

QQQQ - Long-Term Trend

QQQQ Short-term technical analysis: Weekly William's Percentage Range (W%R) is strongly overbought and Lane's Stochastic is overbought, while daily technical indicators are neutral. The price is retesting the rising channel support. In our previous publication last week we expected the QQQQ brief rebound or pause. If long-term scenario #1 is in progress, then the downtrend may resume next week.

QQQQ - Short-Term Trend

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QQQQ weekly indicator is still strongly overbought

The Stock Market Week - 5/23/2008

All the major US indices were negative. For the week the Dow Jones Industrial Average dropped 507.17 points, or 3.91%. The Standard Poor's 500 Index dropped 49.42 points, or 3.47%, while the Nasdaq Composite dropped 84.18 points, or 3.33%.

Nasdaq Trend Analysis

Last week we expected that the resistance level at 50.6 should hold, and the QQQQ price might move down toward the support level of 48.08. The QQQQ reached 50.47 on Monday. Then price turned down losing 3.62% for the week and closed on Friday at 48.2.

QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe.

QQQQ - Long-Term Trend

QQQQ Short-term technical analysis: Weekly Lane's Stochastic is still strongly overbought, while daily technical indicators are neutral. The price has broken the rising channel support level. The QQQQ might see a brief rebound or pause, but the technical indicators and the wave structure for both long-term scenarios suggest that the downtrend may continue. Risk/reward ratio is high.

QQQQ - Short-Term Trend

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QQQQ technical indicators are overbought

The Stock Market Week - 5/16/2008

It was an up week for the major markets. For the week the Dow Jones Industrial Average gained 240.92 points, or 1.89%. The Standard Poor's 500 Index gained 37.07 points, or 2.67%, while the Nasdaq Composite gained 83.33 points, or 3.41%.

Nasdaq Trend Analysis

QQQQ Long-term technical analysis: Our long-term outlook has not changed. We consider two possible scenarios: Scenario 1. The long-term uptrend (10/08/2002 - 10/31/2007) is over, and a new long-term downtrend started on 10/31/2007. The sub wave 2 (0/31/2007 - present) is currently in progress and almost completed. The sub wave 3 down should start soon and break the long-term support trend line around 43ᇀ, and then it'll go lower than the recent low of 41.05 and move down to about 35 in the late fall. Scenario 2. The long-term uptrend that started on 10/08/2002 is still in progress, with sub wave 5 currently in progress. The wave 5 is usually tricky. It might be truncated and form a double top pattern or not even reach the previous high - 55.07. Which scenario we are going to see may depend on how successful the FED's rate cut would be. The FED's market regulation supposed to weaken the upcoming recession, but FED should not use their power to turn the recession into a new bull market. If FED overdoes the rate cut, we may see the scenario 2. With this scenario, by the end of the wave 5 FED will not have enough room for a new rate cut, and the next long-term downtrend would be even more severe.

QQQQ - Long-Term Trend

QQQQ Short-term technical analysis: Last weak we suggested that, if support holds, the QQQQ might reach the channel resistance. The QQQQ rallied from the support level and gained 3.73% for the week and reached 50.11 on Friday. The rally from 41.05 (3/17/2008) to 50.11 (5/16/2008) is close to Fibonacci 62% retracement. Weekly and daily Lane's Stochastic is overbought, while daily William's Percentage Range (W%R) is strongly overbought. MACD has bearish divergence. The rising channel resistance level is near 50.6. The resistance should hold, and the price might move down toward the support level 48.08.

QQQQ - Short-Term Trend

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