Charting Stocks: Live For A Moment, Or, A Moment To Live
29 Jan 16:17
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Quite a few observers of the U.S. stock market have
been living from day to day since the market bottomed on Sept. 21. For them, I
imagine, Tuesday's 200-odd-point drop of the Dow Jones Industrial Average is a
heartbreaker if not a heart-stopper. Ditto the 50-odd-point drop of the Nasdaq
Composite.
Things could literally be worse, and they may well be. The Federal Open
Market Committee is likely to announce an interruption of its year-long rate
cutting spree on Wednesday afternoon. That announcement could easily dump the
stock market, at least temporarily, even if most veterans expect it.
The Dow's Tuesday close of 9618.24 puts it well under key resistance of
9836.25. That means the DJIA may depend on a Nasdaq rally to regain ground.
But note that the preliminary close on Nasdaq was about 1892.96. That's
virtually target support at 1892.88. In the event of a higher Wednesday
opening, the Naz may be due for a sizable bounce.
If the markets open lower Wednesday however, observers should assume that the
DJIA could be due to test the mid-9400 handle as the Nasdaq sinks to 1806.88.
Either event would practically be a stock Fibonacci retracement that every bull
has to put up with.
The point is that DJIA will only be in serious trouble if and when it closes
below 8878.78 - that's a long way from here. The Nasdaq will likewise be
dangerous only if it closes below 1690.19. Until either development takes
place, the current selloff is in keeping with a long-term bull market.
The only way to deal with the markets sanely is to forget the short-term
twitches and stay in touch with the context. Charts give just such a
perspective. Keep the chart handy especially when the market starts edging
higher once again. Remember that the bull won't be back until DJIAcloses above
10043 and the Nasdaq closes above 2034.55.
To try out the new Charting Markets weekly technical newsletter go to
djnewswires.com
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4247; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets".
-By Stephen Cox; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
Data by CSI, St. Louis Fed, Commodity Research Bureau
(END) DOW JONES NEWS 01-29-02
04:17 PM |
