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Strategies & Market Trends : Technical analysis for shorts & longs

SPY 690.64

+1.9%

Feb 6 4:00 PM EST

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To: Logain Ablar who wrote (46186)	6/27/2010 5:01:12 AM
From: Johnny Canuck	Read Replies (1) of 70561

It looks like the intermediate trend is still down for all the indices as indicated by the downward pointing 50 day SMA on all the averages. The only strength seems to be in technology sector as indicated by the fact that it is the only index that still above the 200 day SMA. For me the important fact is that this is the second attempt to break the 200 day SMA. So the strength is relative and weak at best. The SPY and DIA are already in a confirmed long term down trend and has failed to confirm the rally above the 200 day SMA twice. It needs to set a higher high and confirm the break out in the next rally or I expect these indices to break the recent support levels and set new lows The interesting points for me are despite the intra-day volatility, the volumes have remained relative low and the averages are converging. The convergence of the averages indicate a possible consolidation phase. It looks like there is indecision by the institutional traders. Not enough of them are convinced the economy is going to double dip to cause wholesale selling, yet enough are still willing to take a wait and see attitude to see if the economy does firm up later in the year. In the case of JBL, I still not heard the call but looking at the chart it looks like it was a case of sell the good news to lock in profits. The selling kicked in right as the price crossed the 200 day SMA. There was high volume on the day of the earnings release and a positive reaction and low volume on the two profit taking days. If the price bounces above the recent high on a bounce of the market indices, I would be inclined to believe traders believe the outlook put forward by management. Some of the trends discussed on the JBL CC are long terms trends that will evolve over the next 3 to 5 years. New design wins are more important about what is going to happen over the next 9 to 12 months. I am not sure I am as optimistic about some of the health card trends talked about on the call.

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