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Strategies & Market Trends : P&S and STO Death Blow's -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (19036)	12/9/2002 12:25:33 PM
From: Softechie	Respond to of 30712

B.C: Technical Levels : So chalk one up for ignoring the news. When we reviewed the Nasdaq on Friday, December 6th we addressed the oversold condition of the index on a very near-term basis. More specifically, we noted the Nasdaq was pushing the lower end of its 10-day Bollinger bands, meaning it was challenging the trading range which encompasses two standard deviations of its 10-day volatility. So conventionally the active trader would be watching for a bounce. Yet at the same time, we faced this issue of the weaker-than-expected November Employment Report which had been released just one hour ahead of Friday's open. That report raised the question of whether the technical levels might take a back seat while the markets concerned themselves with fundamental issues. Now keep in mind that the hard-core market technician always 'ignores the news' and goes by the chart. In retrospect, that approach would have served the active trader well on an intraday basis Friday. Yet when faced with a technical picture that arguably contradicts a fundamental catalyst ahead of the fact -- without the benefit of hindsight -- a 'stand aside' approach more often than not is the better one. So from a technical perspective, our direct assessment went something along the lines of -- 'this is a situation where (Friday's) price action will be relatively important in contributing to the very near-term technical outlook.' Put another way, there wasn't a reason to aggressively favor a move either direction so keep a close eye on how the market acts. As it turns out, the markets didn't look all bad Friday -- particularly in light of the fundamental backdrop. Total volume traded was on the light side at just over 1.5 billion total shares while the internals were modestly bullish -- advancing volume outpaced declining volume by just under a 2 to 1 margin. More importantly, the Nasdaq did indeed reclaim its 20-day exponential moving average Friday -- but just barely. The index finished the session at 1,422 which provides both the bulls and the bears with room to make a case. Before we get too far ahead of ourselves, keep in mind we shifted towards a near-term bearish bias when we reviewed the index on Tuesday, December 3rd. Going forward, the bull case is that the index edged its 20-day exponential moving average at 1,419 and the near-term bias remains higher so long as that average holds on the close. Based on Friday's somewhat surprising price action -- with the close in the upper quarter of its intraday range and given the fact that it did edge its 20-day ema -- this is the case to which we would give a very slight nod at this point. Yet the bear case is that Friday's close at 1,422 was nice, but it also failed to take out that key straight-line resistance at 1,423. Note that a separate important argument for the bear case shows up on the weekly chart which formed a bearish engulfing pattern with last week's candlestick. All in all, we have cross currents in the markets right now -- a bullish daily picture, a bearish weekly picture, and a bullish monthly picture. So on an intermediate-term basis the markets are likely to chop around here. For the time being, active traders will want to continue to keep a close eye on the Nasdaq's 20-day exponential moving average at 1,418. So long as that level holds on the close the very near-term bias will favor upside. Now if the index would fail to hold in the general vicinity of 1,418 on the close, it will be time to stake out candidates for longer-term support -- entry points for those working on the longer-term bullish assumption. As things look now, the two best candidates for intermediate-term support appear to be a straight-line area at 1,375 which is followed by another notable level at the index' 50-day simple moving average of 1,330. The price action in the early going this morning looks far from alarming yet those will be areas to lock away when or if the index appears to be breaking down. -- Mike Ashbaugh, Briefing.com 09:19 ET Morning Movers : Slightly weaker bias evident headed into the open with the news/commentary on the the limited side thus far today. There are, however, a few well known tech names on the move. Cisco Systems (CSCO close 14.18, -1.5%) has faltered following the New York Times report that many industry analysts say it could be hard to make money in the Wi-Fi wireless Internet access standard. The stock is currently poised to open below both its 20 day ema (13.98) and 200 day sma (13.97). While these averages were penetrated on an intraday basis last week, a key is that they have not been penetrated on a closing basis. Initial support on a sustained intraday penetration is at last week's lows (13.70/13.67) with a solid floor thereafter between 13.50 and 13.44 (chart/retrace). Qualcomm (QCOM close 41.48, -2.1%) is weak following a downgrade based on valuation. Short term support is in the 40.50 area followed by 40.10/39.90. It will take a stabilization back above the 41 and 41.30 resistances to help neutralize the very near term weaker bias. A significant mover on the upside this morning is Hovnanian (HOV close 32.70, +4.8%) after it reported EPS well above expectations for Q4 and guided higher for FY03. We highlighted the stock early Friday on a technical basis as it approached a well defined support in the 31 area. It bounced substantially thereafter and is poised for a test of solid resistance at 34.35/34.5. This marks the top of the Nov/Dec trading range, the 38% of the Nov slide along with its 50 day sma. Next resistance is between 35.35 and 35.60. Always of interest from a trading perspective is the semiconductor sector. Intraday will be watching support at 327 with a breach opening the door back to the support zone that held firm last week near 323/322. For the Semi HOLDRS (SMH) support is at Friday's low and the 50 day ema at 25.40/25.33 Send comments, questions or suggestions to -- Jim Schroeder, Briefing.com