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Technology Stocks : Semi Equipment Analysis

SOXX 314.52

-0.6%

Dec 11 4:00 PM EST

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To: Return to Sender who wrote (43416)	2/14/2009 10:57:44 PM
From: Return to Sender	4 Recommendations of 95574

Amateur Investors Weekend Stock Market Analysis (2/14/09) amateur-investor.net The last 4 weeks have been very volatile with large swings in both directions as the Bears and Bulls continue to fight it out. A 30 minute intra day chart of the S&P 500 during the past 20 trading days shows all of the upward and downward moves which has likely frustrated most investors. Looking at a daily chart of the S&P 500 shows that it has developed a choppy 4 week trading range (black lines) between 878 and 804. Eventually the S&P 500 will break out of this trading range with two possible outcomes. The first scenario would be for the S&P 500 to rise above the 878 level and rally back to its downward trend line (brown line) near 900 or its 100 Day EMA (green line) around 935. Meanwhile the second scenario would be for the S&P 500 to drop below the 804 level leading to an eventual retest of the 11/21 low of 741. As far as the Dow it has been acting the worst of the three major averages and has a defined downward channel (black lines). If this downward channel remains intact look for resistance to occur on any rally attempt at the top of the channel near 8200. Meanwhile if the Dow continues lower the bottom of the channel is now near the 11/21 low of 7450. The Nasdaq has been acting the best of the three major averages but has stalled out right at the top of its downward sloping trend line (black line) near 1600 after briefly rising above its 50 Day EMA (blue line). Furthermore it looks like the Nasdaq may be developing a potential bearish looking Head and Shoulders Top pattern as the 1600 level is acting as the Shoulders while the early January high is the Head. Meanwhile the Neckline comes into play near the 1450 area so that will be a key level to watch over the next few weeks. If the Nasdaq were to drop below the Neckline then that would likely lead to a retest of the 11/21 low at some point. In order for this bearish pattern to be invalidated the Nasdaq must rise back above its 2nd Shoulder at the 1600 level. Finally for those that follow Elliott Wave Theory it appears the S&P 500 may be starting its final 5th Wave down especially if it drops below the 804 level. By definition the length of Wave 5 can range from 38% to 62% of the distance from the initial starting point to the bottom of Wave 3. The S&P 500 peaked at 1576 in October of 2007 while the bottom of Wave 3 was 741 (11/21) which is 835 points. So if you take 38% of 835 that yields 319 points while 62% of 835 yields 516 points. Next if you subtract those numbers from the peak of Wave 4 (944) that would yield a potential target price from 625 to 428 before the final 5th Wave down would complete. At this point I believe the 428 level is a bit extreme however a drop into the 600’s is certainly plausible.

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