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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (40321)	9/20/2008 1:06:41 PM
From: Return to Sender	1 Recommendation Respond to of 95761

Amateur Investors Weekend Stock Market Analysis (9/20/08) amateur-investor.net Well this was one of the wildest weeks I can remember since following the market back to the early 1990's. I'm sure October of 1987 was just as wild but I wasn't following the market back then. I could write a thesis on what my opinions are about this whole situation but I won't get into lengthy details. The magical turnaround that began around 1 pm EDT on Thursday was no fluke and was likely due to the Plunge Protection Team (ala Federal Reserve) trying to prevent a total meltdown in the market. Since the rumor mill was started by CNBC of a massive government bailout around 1 pm EDT it seems rather odd how they would have know about this without someone from the government leaking them the story. Many of us will likely never see a 1000 point upside move in the Dow within a 3 hour and 15 minute window every again as the Dow was near 10450 (point A) right before CNBC leaked the story which was followed by a move up to 11450 right after the open on Friday. Meanwhile after the big gap open on Friday the Dow basically traded sideways the rest of the day between 11280 and 11460. This type of basing action is likely going to lead to another big move early next week and the question is which direction will it be. If the Dow is unable to break above the 11460 area and breaks below 11280 we could see a quick drop back to either its 38.2% Retracement Level near 11100, 50% Retracement Level around 10980 or its 61.8% Retracement Level near 10860. On the other hand if the Dow breaks above the 11460 level then I expect we will see a rally up to its 38.2% Retracement Level near 11870 (calculated from the October 2007 high to the low made on Thursday) which by the way also corresponds to the high made on August 11th (point A) as well . The Nasdaq rallied nearly 250 points from late Thursday into early Friday morning and then got stuck in a trading range the rest of the day between 2240 and 2280. Just like the Dow I expect we are going to see a big move in the Nasdaq early next week. If the Nasdaq fails to rise above the 2280 level and breaks below 2240 then look for a quick drop to one of the Retracement Levels (calculated from the 1 pm EDT low on Thursday to the gap open high on Friday) which are at 2195 (50% Retracement Level) or near 2160 (61.8% Retracement Level). Meanwhile if the Nasdaq does rise above the 2280 level then look for a rally up to the 2365 to 2390 range which corresponds to its 38.2% Retracement Level (calculated from the October 2007 high to Thursdays low) and its 40 Week EMA (green line). As far as the S&P 500 it rallied over 130 points in just over 3 hours from late Thursday into early Friday and then traded nearly sideways between 1236 and 1265. Just like the Dow and Nasdaq I expect we are going to see another big move in the S&P 500 early next week as well. If the S&P 500 is unable to rise above the 1265 area and breaks below 1236 look for a quick drop back to either its 38.2% Retracement Level near 1215, its 50% Retracement Level around 1200 or to its 61.8% Retracement Level near 1183. Meanwhile if the S&P 500 rises above the 1265 level then look for a rally up to either its 38.2% Retracement Level (calculated from the October 2007 high to Thursday's low) near 1300 or its August 11th high at 1313 (point B). Finally as I have mentioned the past few weeks I said to watch the Volatility Index (VIX) closely as a significant rise into the 30's could lead to a nearing bottom. On Thursday the VIX rose above 40 (white line) which has been an extremely rare occurrence going back to 1990 as it has only happened previously in 1998, 2001 and 2002. I know a lot of people have said that the large turnaround from Thursday into Friday was a significant bottom for the market. That could be the case however I would caution you that in 2 out of the 3 previous cases the VIX initially rose above 40 (points C) the real bottom in the Dow didn't occur until a month or two later (points D) as the VIX rose back above the 40 level (points E). However in the Fall of 2001 after 9/11 the VIX rose above the 40 level (point F) which was followed by a 6 month rally (points G to H) so in that case a significant bottom occurred with the initial rise above the 40 level in the VIX. Thus over the next month or two we could see one of two things occur. For the Bullish crowd Thursday's lows could be a major low which will be followed by an extended choppy rally through the end of the year into early next year like we saw from the Fall of 2001 into the early part of 2002. On the other hand it's certainly not out of the question that Thursday's lows were not the real bottom and that the major averages could still go even lower over the next 4 to 8 weeks before a real bottom occurs like we saw in late 1998 and in late 2002 as the VIX rose back above the 40 level multiple times. If by chance we do see a repeat of the 1998 or 2002 scenario it appears the Dow could eventually drop back to near the 10000 level which is along its longer term upward sloping trend line (yellow line) and is also very close to its longer term 61.8% Retracement Level (white line) calculated from the October 2002 low (point I) to the October 2007 high (point J). Thus it will be interesting to see which of these two possible scenarios pan out over the next few months. So far in 2008 our ETF Strategies have worked the best with SPY ETF which tracks the S&P 500 up 27% versus the S&P 500 which is down 15% for the year.