Technical analysis for shorts & longs Message Board

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Strategies & Market Trends : Technical analysis for shorts & longs

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Jan 16 4:00 PM EST

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From: Return to Sender	3/17/2007 10:39:50 PM
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Amateur Investors Weekend Stock Market Analysis (3/17/07) amateur-investor.net The market sold off again this week after undergoing an oversold bounce the previous week. All the major averages have now tested support at their 200 Day EMA's and these will be critical areas to watch. The Dow dropped back to its 200 Day EMA (blue line) near 11950 on Wednesday but was able to bounce off this key support level. It will be important for the Dow to hold support near its 200 Day EMA during the next few weeks. If the Dow were to break below its 200 Day EMA then its next support level would either be at its 50% Retracement Level near 11750 or at its 61.8% Retracement Level around 11500. Meanwhile if the Dow is able to hold support near the 11950 area and attempts to rally look for upside resistance at its 20 Day EMA (green line) near 12295. The S&P 500 also held support near its 200 Day EMA which was around the 1365 level and near its 38.2% Retracement Level as well. Thus it will be important for the S&P 500 to hold support near the 1365 level in the weeks ahead. If the S&P 500 breaks below the 1365 level then its next area of support would either be at its 50% Retracement Level near 1340 or just below the 1320 level which coincides with its 61.8% Retracement Level and rising 400 Day EMA (purple line). Meanwhile if the S&P 500 is able to hold support around 1365 and attempts to rally look for initial upside resistance near its 20 Day EMA (green line) around 1405. As far as the Nasdaq it did briefly drop below its 200 Day EMA (blue line) this week but held support at its 38.2% Retracement Level near 2332. Thus it will be important for the Nasdaq to hold support at its 38.2% Retracement Level in the weeks ahead. If the Nasdaq were to break below the 2332 level then its next area of support would either be at its 50% Retracement Level near 2375 or at its 61.8% Retracement Level near 2210. Meanwhile if the Nasdaq does hold support at its 38.2% Retracement Level and attempts to move higher look for initial resistance to occur at its 20 Day EMA (green line) near 2405. As we have seen in the past after the Nasdaq has made a substantial move higher for several weeks and gained from 25% to 26% this has been followed by a rather steep correction of 14% to 15%. The last two times the Nasdaq has gone through a correction it took from 13 weeks to 17 weeks before a bottom occurred. Currently the Nasdaq has only been in a correction for 3 weeks and dropped around 8% so if the previous pattern continues then we may have to wait for several more weeks before it makes a major bottom. Finally although corrections are never fun to go through they do give investors a chance to figure out which stocks may lead the market higher in the future once a bottom does occur. For example DKS has held up well of late and has formed a Double Bottom pattern. Now what we would like to see over the next 3 to 4 weeks is for DKS to develop a constructive Handle before attempting to make another move higher.

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