Market SnapShot for Monday June 28, 1999
Last Friday was a day of consolidation, with both the September S&P and Treasury bond futures making an inside day where the high and low was within the range of the day before. It this the calm before the storm or is the worst over?
After the bounce to test the 20-day exponential moving average overhead in the established downtrend, bonds went to next lows last week. We have drawn a pair of Trader Vic 1-2-3 lines on the daily chart. If the September T bond can close above 114^09 today there will be a good chance that a short-term bottom has been seen but until resistance between 115^09 to 116^08 is overcome, bonds are still in a downtrend and interest rates continue to be on the rise.
Over the past month, the market has formed a bear flag on the daily chart. 1310 is now key support. A break of 1310 will signal an immediate test of the June 2 low of 1290.50 with a high probability of breaking it on the test. Using the Edwards and Magee measuring formula, we can calculate a target should the bear flag break to the downside. Subtract the recent low of 1290.50 from the high of 1394.30 and we get 103.80 points. Subtract 103.80 from the high of the bear flag of 1365.00, we arrive at a target of 1261.20.
Going into the open on Friday, we expected sellers to emerge in the 1337-1340 area due to the fact that sellers from the larger intraday time frames (45-135 minutes) were looming at various commonly used moving averages overhead, which would act as resistance. The market opened higher and sold off until the close. At this point, we have a pair of Trader Vic 1-2-3 lines on the 45-minute chart and will be watching this test of bottom with interest. Resistance overhead is at 1334, 1341, 1339, 1348, 1365, and 1392-1394. Support is at 1319.10, 1300.50 and 1290.50.
The Dow Jones Industrial index is nearing a test of key support at 10,400.
The Dow Jones Transportation index has broken key support, continues to make new 20-day lows, and is casting a bearish shadow upon the market according to traditional Dow Theory.
The NASDAQ 100 Index failed to break out on the test of the all time high last week and is pulling back after making a Trader Vic 2B top sell signal. The first target of the pullback is the 20-Day EMA, which provides support in the 2,150 area. This area must hold if there is to be another bounce to test the top again anytime soon.
Charts specific to these comments have been posted to intelligentspeculator.com
|
