CHARTING MONEY: Nasdaq Takes Toys, Goes Home
17 Dec 12:00
By Stephen Cox, CMT
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Impressive upside breakouts of U.S. stock indexes
Monday are crumbling late Tuesday morning because the tech-heavy Nasdaq
Composite didn't want to play on Monday's close.
If the Nasdaq's non-confirmation persists through the Tuesday's close, then
it's all over for the bulls.
Treasury futures aren't going anywhere in the meantime and the dollar remains
technically weak.
Most U.S. stock indexes recorded tentative upside breakouts on Monday. For
now, however, the breakout is subject to a single, telling, qualification that
was alluded to in Monday's column, that is, the non-confirmation of the Nasdaq
Composite. The index on Monday failed to close above 1419.11 breakout
resistance. A genuine long-term move will be confirmed by all the indexes.
Thus, Nasdaq's non-confirmation is a definite caution signal to the bulls.
The Dow Jones Industrial Average closed Monday above breakout resistance at
8580.82. As of this writing, the DJIA had edged below 8580.82. A continued
slide will mean a short-term loss of roughly 200 - 400 more points.
March 10-Year Pinned And Wriggling For Now
The CBOT leading March 10-year T-note, which I take to be long-term bullish,
nonetheless betrayed technical weakness Monday when it settled below 112-16,
which is the value of the 13-day exponential moving average. As of this
writing, the intraday high is 112-16. Until that resistance is taken out, the
contract will be liable to a dip to 111-16 - 111-00 at least, and a move down
to the Dec. 2 low of 110-03 couldn't be ruled out in that case.
For now, the March T-note continues to consolidate broadly, between 116-00
and 110-00, roughly speaking. That consolidation is consistent with the a
long-term bull that promises to get underway again early next year.
EUR Eating Up A Dollar Lunch
The euro moved up sharply against the dollar Tuesday morning, nearly to
target resistance at $1.0340. That's strong resistance, but the selloff from
the intraday high is finding support where it should, at $1.0262. It's likely
that a correction will only briefly interrupt the euro's climb towards
$1.0438.
The dollar's failure against the yen Tuesday at Y121.79 resistance is a
straightforward bear signal. A decisive move below Y120.00 will have taken out
weekly uptrend line support and pointed the dollar down to Y119.51 - Y117.98
support. Watch that support closely because a decisive move below it could
easily cost the dollar another 10 or so yen.
Fear Indexes Scared Stiff Resistance Tuesday
The futures markets for crude oil and gold shot up to important resistance
targets, and preliminary reading suggest that the resistance will be taken
out.
The Nymex leading January crude oil contract has edged into the important
$29.50 - $30.98 resistance band. The surge of technical momentum that
accompanied Monday's strong gap-up trading implies that the resistance will be
taken out. That event may, however, be preceded by a dip to $28.45 support. In
any case, the contract is now technically strong above $27.30.
The Comex leading gold contract has run smack into $339.50 resistance. If
that resistance is taken out, then a pause at $348.00 would be routine. But a
large bullish triangle formation competed on the weekly chart implies an
extended move toward $365.10 by the end of April 2003 at latest. The signal
will be a weekly settlement above $348.00.
To try the Charting Markets weekly technical newsletter go to
djnewswires.com
For more technical analysis see: Dow Jones Newswires, N/DJTA; Telerate, page
4073; Bloomberg, NI DJTA; and Reuters key word search "Charting Markets."
-By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com
(Stephen Cox, a chartered market technician, is chief technician for Dow
Jones Newswires.)
(Data by CSI, Commodity Research Bureau)
(END) Dow Jones Newswires
12-17-02 1200ET |
