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Technology Stocks : Semi Equipment Analysis
SOXX 304.96+0.4%Dec 23 4:00 PM EST
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From: Return to Sender1/31/2009 6:40:05 PM
5 Recommendations  Read Replies (1) of 95631
 
Amateur Investors Weekend Stock Market Analysis (1/31/09)

amateur-investor.net

The Dow had it's worst January Monthly Performance on record as it finished down -8.8%. Some of you have probably heard of the January Effect which says how January goes will be a reflection of the Yearly Performance. Here are the actual statistics going back to 1897 involving the Dow as shown by the table below.

           (+) Jan  (+) Jan  (-) Jan  (-) Jan
           (+) Year (-) Year (-) Year (+) Year
# of Years 	59 	14 	  26 	  13
  	        81%     19%       67%     33%


Since 1897 if January has had a Positive Return then the chance of a Positive Yearly Return is 81%. Meanwhile if January had a Negative Return then the chance of a Negative Yearly Return has been 67%. Thus statistically there has been a stronger correlation with a Positive Return in January versus a Negative Return.

As far as the major averages the Dow stalled out near its 20 Day EMA (blue line) on Wednesday and then came under selling pressure Thursday and Friday. The Dow has dropped back to the bottom of its Triangle pattern and appears to be at a key inflection point. If the Dow takes out the low made on 1/23 near 7900 then look for an eventual retest of the 11/21 low of 7450 at some point in February. Meanwhile if the Dow can hold support at the bottom of its Triangle then look for a potential rally back to 8400 or its 50 Day EMA (blue line) near 8600.



The Nasdaq stalled out on Wednesday right at its 50 Day EMA (blue line) and then pulled back Thursday and Friday. The support level to watch next week is at the bottom of its Triangle pattern near 1450. If the Nasdaq can hold support at 1450 then we could see a rally develop with an eventual move back to around 1550 or up to the top of its Triangle near 1600. Meanwhile if the Nasdaq drops below the bottom of its Triangle and takes out the 1/23 low of 1434 then that may eventually lead to a retest of the 11/21 low near 1300 at some point in February.



As far as the S&P 500 it stalled out below its 50 Day EMA (blue line) on Wednesday and is nearing the bottom of its Triangle pattern near the 810 level. If the S&P 500 can hold support near the 810 level then we could see a rally develop with a potential move up to its 50 Day EMA at 885 or the top of its Triangle which is nearing the 900 level. Meanwhile if the S&P 500 drops below the bottom of its Triangle and takes out the 1/21 low at 804 then its likely a retest of the 11/21 low at 741 will occur in February.



Finally for those that follow Elliott Wave Theory right I favor the scenario that Wave (4) may have ended on 1/6 and the sell off that followed is the beginning of Wave 1 (5) down. This scenario would be confirmed if the S&P 500 drops below the 800 level.



The charts seen above are my own while the commentary is Amateur Investors. Their charts do not update while my will so we will be able to follow how accurate the commentary proves to be. RtS
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