Click Here to Signup for a Free Trial Membership and have access to
our Stocks to Watch List and Daily Breakout Reports

Weekend Stock Market Analysis

(2/12/05)

The major averages continue to rally off their late January lows as both the Dow and S&P 500 are within striking distance of their early January highs.  The Dow is only about 70 points away from its early January intra day high near 10870 (point A) while the S&P 500 is around 12 points from its intra day high (point B).  

The current chart pattern of the S&P 500 looks similar to what occurred from last Summer into early Fall although on a smaller timescale.  Thus if the S&P 500 does reach its early January high near 1217 it will be interesting to see if this is followed by a quick sell off like occurred last October (points C to D).  

Meanwhile the Nasdaq has been having a more difficult time rallying although it did do well on Friday.  If the Nasdaq does try and move higher I would look for resistance to occur in the 2100 to 2120 area which corresponds to its 50% and 61.8% Extension Levels (calculated from the early January high to its late January low).

If the Nasdaq is going to continue higher a lot may depend on what the Semiconductors do.  The Semiconductor Holders (SMH) were up strongly this week however they are nearing a previous upside resistance area near 34.50 (point E) which coincides with their longer term 38.2% Extension Level (calculated from their early January 2004 high to their September 2004 low).  It's going to be interesting to see if the SMH's stall out again near 34.50 or whether they can break above 34.50 leading to a stronger move up to their 50% Extension Level near 37 (point F).  If the SMH's break strongly above 34.50 then this will have a positive affect on the Nasdaq and probably allow it to reach the 2120 area as mentioned above.   

Meanwhile I'm also watching the price of Crude Oil for either a rise above the 50 level (resistance area) or a drop below the 45 level (support area).  If the price of Crude Oil rises above 50 then this would likely lead to a rally back to the highs made in late October of 2004 in the mid 50's which would cause some selling pressure to redevelop in the major averages.  On the flip side if the price of Crude Oil drops below 45 then this would lead to a drop back into the lower 40's which may help the major averages sustain their rally off the late January lows. 

Finally its important to keep an eye on those stocks which have developed a favorable chart that are in a strong sector.  The Oil stocks have been strong lately and one we featured last November was ATPG as it was developing a Flat Base.  ATPG then broke out of its Flat Base in early December accompanied by strong volume and has been trending higher in tandem with the Oil sector.   

Signup today for a 2 Week Trial Membership  and have access to our Stocks to Watch List which provides a list of Stocks that are exhibiting a favorable Chart Pattern such as the "Cup and Handle", "Double Bottom" and "Flat Base".  Also you will receive our Daily Breakout Report by email which Alerts you to Stocks that are breaking out of a favorable Chart Pattern from our Stocks to Watch List.  

Click Here to signup for a "Free" 2 Week Trial Membership

Amateur-Investor.net