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

To: Logain Ablar who wrote (43391)	6/9/2006 3:04:21 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68311

Tim, It may be a value stock, but certainly is unloved right now. It is in a confirmed down trend with not much strong support near the current levels. In fact MSFT is setting 4 year lows. It have not been lower since the 2000 tech meltdown. I agree they are still generating huge amounts of cash. The key is that it is not resulting in any growth in profits. It will probably pay off for them, but short term there is not much reason to hold the stock. 139.142.147.19

To: Logain Ablar who wrote (43391)	6/9/2006 3:52:06 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 68311

Technical Thursday: Sentiment Suggest Potential Rally Thursday, June 8, 2006 By George Leong Click here for StockHouse Conflicts and Disclosure Policy Visit the George Leong Bullboard here. Current market sell off could end soon You may think it's a bear market out there but it is not technically a bear market despite the obvious capitulation in selling. Stocks have failed to rally with any sustainability and have traded largely on oversold indicators. The upside push appears quite fragile at this time. When we analyzed the current market action, the NASDAQ and Russell 2000 have recorded the largest declines since trading at their respective 52-week and multi-year highs. The NASDAQ is down 6.42% from its April high while the Russell 2000 has lost 5.95% from its May high. The blue chip Dow broke below support at 11,000 to an intraday low of 10,890.24 on Tuesday, its lowest level since March 8. But even given the recent selling in the Dow, the index is down a mere 3.91% from its May high. The S&P 500 is down 2.94% from its May high. The market declines still don't indicate a trend reversal. In general, an index should reverse by about 11% to 15% before I would consider it a market reversal. Yet it is clear that the near-term technical picture, while extremely oversold and deserving of some buying support, has more of a downward than upward bias. The prevailing weakness in the market and its inability to mount any sort of sustainable gains is a not a surprise given what I'm presently seeing on the sentiment side. On the sentiment side, the new high new low (NHNL) ratio on both the NYSE and NASDAQ continues to be fragile, indicating the stress of investors. The NHNL ratio on the NYSE has come in at below the bullish 70% level in 33 of the last 41 sessions. We saw a brief period when the reading fell below the bearish 20% level from May 12-24. Since then, the sentiment reading on the NYSE has improved, albeit seven of the last eight sessions were below 70%. The chart below shows the decline in the NYSE NHNL ratio and the recent pickup. Note that the NYSE NHNL ratio appears to be bottoming as was the case back in October 2005 when markets were declining only to be followed by a strong market rally extending into the New Year. Now whether this is also the case at the present time is uncertain, but there are some indications the market may be set for a rally if the sentiment readings can hold. On the NASDAQ, sentiment readings have also been weak but not to the same degree as the NYSE. As far as the daily readings, 17 of the last 18 sessions were below 70%, yet the sentiment readings on the NASDAQ have yet to fall below the bearish 20% level. The chart below also suggests the NASDAQ may be primed for a rally if the sentiment hold. Let's also take a look at the CBOE volatility indicators. On the technology front, the CBOE NASDAQ Volatility Index or VXN - a barometer of near-term market volatility based on NASDAQ 100 index option prices. The VXN is considered a contrarian indicator. When the VXN rises, it may suggest a market bottom. Conversely when the VSN declines, it may suggest a market top. The 5-day VXN to June 6 was quite high at 20.36, well above the previous weeks and above the short and long-term moving averages. The rise in the VXN suggests the increased fear in investors and may indicate a near-term market bottom on the horizon. The theory behind this is when fear is high, investors tend to capitulate and sell stocks indiscriminately. In the broader market, VIX readings are also higher and suggest a near-term bottom. In spite of the depressed sentiment and breadth, there are some signs the current fallout will inevitably stop and stocks could reverse course. It's just a matter of when this will happen. The current bias remains negative. Failure to hold could see further deterioration on the charts. For the markets to hold, we need to see some buying support and improved sentiment. There are some indications the selling may be close to an end. But for time being, you may want to wait for the selling to exhaust itself out before thinking about jumping in. Happy trading and see you next time! -------------------------------------------------------------------------------- George Leong is the founder of Investornomics.com (http://www.investornomics.com) - a provider of independent stock