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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (43270)	5/1/2006 12:12:05 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68311

TradingMarkets.com Why I Am Watching The Dollar Monday May 1, 9:29 am ET By Gary Kaltbaum Gary Kaltbaum is an investment advisor with over 18 years experience, and a Fox News Channel Business Contributor. Gary is the author of The Investors Edge.Mr. Kaltbaum is also the host of the nationally syndicated radio show "Investors Edge" on over 50 radio stations. Gary is also editor and publisher of "Gary Kaltbaum's Trendwatch"...a weekly and monthly technical analysis research report for the institutional investor. We really needed to start today with a chart of the almighty DOLLAR. We do not know what effect it will eventually have but we have our ideas. Very simply, and as we have expected since its wicked breakdown 10 days ago, the DOLLAR is cratering...not just going lower...but cratering. We try to stay very technical with our words but can't help but wonder what is at hand and what the implications are going to be down the road...but we promise you...they are not good. We have been believers and have told you many times that our good buddy Greenspan sowed the seeds of this by keeping rates ridiculously too low for too long to protect our economy...when he should have just let things be. Because of this, we are now dealing with a housing bubble, soaring commodities, soaring oil and a plunging dollar. Ladies and gentleman, ultimately, this has the potential for a powderkeg. In the past week, the FED...now run by Big Ben Bernanke, almost said that the raising of rates on the short end could stall soon. We would hate to see what would happen if Big Ben had to raise rates to defend the dollar. Hand in hand with the dollar is the BOND MARKET. The only good news is that for the past couple of weeks, the drop has stalled. But any attempted bounce has been about as anemic as can be. Oversold or not, BONDS are in a bear market...but are due for a bounce...maybe. Any bounce will be sellable at this juncture. In spite of what we see as a lot of fraying at the edges (and there is plenty), all major indices continue to stay above short-term moving averages as well as short-term support. Until these areas are broken, we will continue to give the market the benefit of the doubt. Here are the numbers. We start with the NASDAQ and NASDAQ 100 because they are closest to moving averages. (Thank you MSFT) The NASDAQ's 50 day average is at 2315 with short-term support at 2299. The NDX 50 day average is at 1688 with short-term support at 1684. The NASDAQ will not turn longer-term bearish until it breaks 2232 and very long-term bearish if it breaks 2189. The NDX will turn long-term bearish if it breaks below 1633. First support on the DOW is 11,260 ,11,039...then 10,922 and more importantly at 10,661. There are stairsteps of support on the S&P has it has built five higher lows at 1295, 1280, 1268, 1253, and most importantly 1245. A break below 1295 changes the trend of higher lows and breaks the 50 day average. With all the internal deterioration we have seen, it is crucial you watch these levels at this juncture. So far, the major indices have been saved by good rotaion out of some groups and into others. The TRANSPORTS continue to be strong while staying above moving averages...but we are finally seeing a few leading names top out. Short-term tops are in place in names like UNP, EXPD, BNI, CHRW, LSTR and LUV. No problems with small-cap and mid-cap indices to address. We like the fact that they all held the 50 day average on the latest pullback and will only start to worry if those areas are breached. WORLD MARKETS continue to do just fine. EUROPE is in pullback mode and needs to be watched....especially the London FTSE. We would also watch the the 16,700 area for the JAPAN NIKKEI. A break below would take out its recent breakout. UTILITIES held support at the October lows at 380. UTILITIES remain overall bearish but a move above 403,25 would be its first bullish sign in a while. A break below 388 ends any chance and a further break below 380 would be very negative. In our last report from Wednesday night, we told you the BIG BANKS were setting up to break out. Well, it didn't take long as they absolutely ramped on Thursday and followed through on Friday. Just take a look at the charts of WB, WFC, BAC and even C. Other FINANCIALS went along for the ride. We would love light volume pullbacks into support for better entries at this time. On the other end of the FINANCIAL spectrum, we are noticing distribution in the BROKERS. We will actually go out on a limb ands say a couple of names have put in tops while others may follow. We bring this group up because it may be a proxy for the whole market. We start with MERRILL LYNCH as it broke the 50 day average in a meaningful way for the first time in a year. Volume was very heavy. When a stock breaks a moving average for the first time after holding it for a long time, it could be meaningful. LEGG MASON is the worst of the group as it broke on March 7th. Friday's breakdown is potentially very negative as it is now sitting at the longer-term averages. A break below and see ya. We will be watching GS, LEH and BSC very closely this week. All dropped on Friday with volume. COMMODITY stocks remain very extended off of their recent moves and would only look to buy only on pullbacks. Thursday's action was amazing as most gapped down on the news that China was raising rates...and then recovered some. We suspect they are now going to trade with loads of volatility due to the extended conditions. GOLD...WOW! Need we say more! Just keep in mind, risk picks up when the price of GOLD is above $650 with the 50 day average at $575. Remember what we have taught you. Everything eventually reverts back to moving averages. We just don't know if it is by pullbacks or stalling action.