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Mar 31st: [Currently running a reduced service awaiting a replacement part for my computer]. The low volume relief rally started yesterday did well to close in the upper range of yesterday's gains following a surge in oil prices. Volume dropped again following yesterday's below average gains. The NASDAQ once again struggled at 2000 - so bears continue to hold the edge here although there is a bullish divergence in the MACD trigger line developing. The NASDAQ 100 managed to register a distribution day but volume was below average. Bullish divergences are developing in its MACD trigger line, and on-balance-volume. The Dow continues its bounce off the 200-day moving average, keep a watchful eye for an accumulation day. The S&P stalled on higher volume following yesterday's break of sharply declining resistance - watch for a retest of its near term low of 1,163.

Breakout failures: not checked

Breakout targets met: not checked

Mar 29th: The tension in the markets was released with a downward sweep. Volume picked up, but was below average volume - although technically it was a distribution day in all markets. The Russell 2000 was worst hit and is heading straight for support of the declining channel/measured move target, and its 200-day MA. The larger caps [Dow and S&P] are on track to test their 200-day MAs, while the tech indices [NASDAQ 100 and NASDAQ] look set to reach their measured move targets. Value players should start taking note in what likely will be a swift down and equally swift recovery - but I would start small. Gold member oversold plays will give you a good starting point. The strength of the recovery will depend the quality of new leaders. What of the breakout plays? These will likely come into their own a couple of weeks after a bottom is in place. I am looking to late April and May when the new leaders will come into their own.

Breakout failures: CBRL featured for Sep 10th and again for March 2nd, hit its stop after warning. HYGS continued its rapid drop, shedding another 8.8% today - the stock featured for March 10th. IVN featured for March 1st suffered as other mining stocks have in recent days, hitting its stop after earlier gains.

Breakout targets met: none

Mar 28th: I am very disappointed with the attempted rally in the tech indices [NASDAQ 100 and NASDAQ]. Looking at the upper shadows of the last two day's worth of candlesticks (inverse hammers) indicates supply on rallies. The low volume represents a lack of demand - another tick in the bearish column. The measured move target is a more probable downside target as the 200-day moving average doesn't look like it will hold for support. However, given the heavily oversold nature of the stochastics it would be a risky short - we could have a rapid downside move and an equally sharp rally. The semiconductor index sits inside fib retracements - but is showing similar overhead supply with 5 consecutive days of long upper shadow of its candlesticks.

The larger caps [Dow and S&P] continue to move towards their respective 200-day moving averages. Slow stochastics have finally entered oversold levels, but the S&P still has some 25 points to go to test its 200-day MA. The Russell 2000 paints a similar picture to the S&P - although the measured move target lies very close to the 200-day moving average and channel support. If the latter index makes it to this level (594) it would make a very attractive buy.

Breakout failures: SIM finally succumbed to its stop price after scoring gains as high as 91% from its first feature on Nov 29th. Stock featured for a second time on Dec 22nd.

Breakout targets met: DIGI featured on Mar 23rd exceeded its price target after a buyout offer for a 65% gain.

Mar 24th: A quiet day of trading into the long weekend. You will see in the leader weekly charts illustrated above that the NASDAQ has lost its 50-day EMA. A similar event in July of last year saw a sharp drop and an equally fast recovery - will we have the same motion here? Look to 1,900 as support in this index. However, I think we will have a bounce back to 2,050 before then as slow stochastics are now deeply oversold. The larger cap indices [Dow and S&P] remain vulnerable to further selling as they continue to march towards January lows. Secondary indicators were little changed - indeed the $NASI had a solid down day, although an undercurrent of bullishness is becoming evident in the CCI indicators of the three tech secondary indicators, $NAA50, $NASI and $BPCOMPQ. It may be still a little early to buy wholesale, but dollar cost averaging tech stocks at this stage could reap dividends (investing, without commiting large amounts of capital to a single purchase).

Breakout failures: OTIV featured on March 9th clipped its stop, but ended the day on a bullish hammer.

Breakout targets met: none

Mar 23rd: The tech indices [NASDAQ 100 and NASDAQ] stumble along just below their respective 200-day moving averages. Volume dropped off from yesterday and has remained below average since losing the 200-day MA (yesterday's volume, although heavier, was still below the 60-day EMA of volume). Just as the breakouts to new highs in the large cap indices was met with lacklustre volume (and turned bearish soon afterwards), so has the loss of the 200-day averages - tests (breakouts and failures) of important support and resistance are always accompanied by heavier volume. The fact we haven't seen this should be a warning to the bears.

What of the larger caps? The Dow and S&P have not suffered from lacklustre trading volume, although today's tight trading on heavier volume may mark a sign of churning (and would be considered bullish), we are still to see a test of nearby support, be it the January lows or the 200-day MA - so I would remain cautious here. Short term traders will likely jump on a break of 10,486 and 1,176 in the Dow and S&P respectively, but don't expect traders to hold a position into the long weekend. Slow stochastics have crept into oversold territory, but it still looks like there is some room for a couple more days of downside. The Russell 2000 was today's key loser as small caps took another beating with another 12 points to go to reach the first point of support of January lows. To add insult to injury, there were another three breakout failures, we are still some time away from seeing a shift to solid buying. Fine tune the breakouts you buy, yesterday's MEOH was the first A+ Investor Business Daily ranked stock to feature in my breakout scan since SHFL on February 28th (the latter of which hit its stop for a 7.6% loss). If quality can't stick, then below par stocks can hardly be expected to perform.

Breakout failures: BLK featured on January 6th. MINI featured on Mar 15th. HAWK also featured on Mar 15th.

Breakout targets met: none

Mar 22nd: No surprises who won today's battle of the bulls and the bears. The NASDAQ 100 and NASDAQ lost their respective 200-day moving averages on heavier volume. From an intermediate term perspective the measured moves down to 1,950 and 1,400 in the NASDAQ and NASDAQ 100 respectively are logical downside targets here, but I would watch for a relief bounce first - which could be triggered as early as tomorrow. The oversold nature of the markets leaves short positions vulnerable to whipsaw, and it will be the rush to cover that will trigger a sharp rally. The S&P and Dow have less support to hold them up. January's lows will be the first port of call (although January lows were no support for the tech indices) before we bring the 200-day moving averages into range. Neither of the larger cap indices show oversold slow stochastics - which means more downside on the way.

Breakout failures: UPCS featured on March 1st touched support of its earlier congestion but hit its suggested stop price.

Breakout targets met: none

Mar 20th: In the intermediate term we still have weakness as marked by the secondary indicators [$NAA50, $NASI and $BPCOMPQ]. The $NASI and $BPCOMPQ remain in a well defined downtrends and show no signs of reversing, yet. The secondary indicators are the clearest way of looking at the health of the markets and if you ever wanted to see the mother of bearish divergences, check out the $NYSI. For reference, see what the bullish divergence in May and August of 2004 in the NYSE summation indes led too - now looks at the whopping bearish divergence in December and February to get an idea of what could follow. If this doesn't make you worried you should be very careful about where you put your money to work (if at all).

If we are too look at the 'daily noise' of the markets we could be looking at a short term bounce. The larger caps comprising the S&P and Dow rallied into the close on heavy volume (following the S&P rebalancing). The NASDAQ 100 held the 200-day moving average while the NASDAQ continued its journey towards it. We are well positioned for a bounce, but the break of longer term support suggest this bounce will rise no further than a test of former support (now resistance). Slow stochastics in the tech indices are once again approaching deeply oversold levels - a point where they last bounced. The fly in the ointment to this is the semiconductor index which closed below the 50- and 200-day moving average. Recommendations: Keep in cash and be wary of current breakouts - markets are spanking these plays to the downside after their initial volume moves up. Gold members - I am working on the list for tomorrow.

Breakout failures: none

Breakout targets met: FVE featured on Feb 24th. NFLD featured on Nov 9th gained a maximum of 54% before it reversed to hit its stop for a 13% loss. RKTI featured on March 14th failed to hold its breakout.

Model portfolio: KSWS and CLTK added.

[Mar 16th: No doubts about the market direction today as volume again climbed. Today's horror show was brought courtesy of GM. The NASDAQ 100 will be the key index to watch tomorrow as it hovers over its 200-day moving average. If there is no bounce it will signal bad things for the other indices. There is hope in the shape of the semiconductor index which sits at the convergence of the 200-day and 50-day moving average. Unfortunately the bullish 'three white soldiers' in the S&P failed to provide traction to the decline. Selling was heaviest in this market. Not to leave out the Russell 2000 which also lost support. In all markets the 200-day moving average looks the next logical place for support. Given this, breakouts remain treacherous territory.

Breakout failures: HYSL featured for Jan 27th closed for 5.76% loss. RBAK featured on Feb 1st for a 9.25% loss. STA featured on Feb 2nd closed for a 3% loss.

Breakout targets met: none

Mar 15th: The cracks started to show in the market as higher volume selling left some markets below support. Most notable of the decliners was the S&P which closed below support dating back to October. Bulls have only February's three white soldier combination (normally a reliable buy signal on the test of the open of the second of the three candlesticks - in this case 1,190) to fall back - otherwise it the 200-day moving average for this index. The NASDAQ 100 sits closest to this important support level (only 20 points to go - we could see a test on Friday), while the NASDAQ ended the day on a bearish engulfing pattern. Secondary indicators [$NAA50, $NASI and $BPCOMPQ] provide no relief and continue to support an accleration to this decline. The Dow remains the strongest index, although it has suffered from a sequence of distribution days it remains above support. The Russell 2000 is also clinging to support and is approaching an important apex of support and resistance.

Breakout failures: none

Breakout targets met: none

Model portfolio: WEL sold at stop price

Mar 14th: Markets held status quo - holding their respective support levels. The tech indices [NASDAQ and NASDAQ 100] clung to former channel resistance. The Dow limped in gains on lighter volume, just as it did last Thursday. The Russell 2000 held support of the rising trendline from January which is also the 50-day moving average. The S&P held support from October but volume was lighter and the sell signal in the MACD trigger line holds. Volatility remains complacent, the next move - when it comes - will be substantial.

Breakout failures: none

Breakout targets met: none

Mar 12th: The tech indices [NASDAQ and NASDAQ 100] went the way of the larger caps and Russell 2000, negating their respective upside breakouts from the declining channel. Volume came in lower on the breakout reversal, and bulls will take heart from below average volume trading in the tech indices for all of March. The 200-day moving average looks enticing given the initial failure of the January decline to test this important long term support level. The semiconductor index was the real villian on Friday, although there is an important convergence of the 50- and 200-day moving average which would make an ideal test and bottom for this correction. It remains to be seen what form bullish divergences take in the secondary indicators [$NAA50, $NASI and $BPCOMPQ]. Each of these indicators has turned a faster rate of decline, but the next bottom should be a strong place to buy. Based on the success/failure rate pattern of my breakouts (see sidebar) I would expect this to occur in late April, early May.

The Dow logged another distribution day - but volume was average. Look to October/January support line for a bounce. A failure of this line would likely send this swiftly down to the 200-day moving average. A similar picture has developed in the S&P, although this index finished Friday on October/January support. There is little room for further downside if this is only a short term correction of the rally off October lows. The Russell 2000 sits a similar juncture as it moved back inside its declining channel, ending Friday on January/February support. A break of this will put the 200-day moving average on the rader here too.

Breakout failures: FIX featured on March 4th.

Breakout targets met: none

Mar 10th: Markets attempted rally still left control to the bears. The Dow did not recover more than 50% of yesterday's losses and needs further gains tomorrow to suggest there is anything more to this bounce. The S&P and Russell 2000 are testing important support and are likely to bounce upwards - but there will need to be some decent volume if this is going to build into something more positive. The tech indices [NASDAQ and NASDAQ 100] ended the day on bullish hammers (and are still above former channel line resistance), but secondary indicators [$NAA50, $NASI and $BPCOMPQ] increased their respective rates of decline and it remains doubtful for how much longer these indices can hang on.

Breakout failures: FDEI featured for Mar 9th is the first March breakout to crack. IVAN featured the previous day was the second, and PPHM also featured on Mar 8th the third. SHFL featured on Feb 28th clipped its stop but sits at long term support.

Breakout targets met: none

Mar 9th: Further selling has put pressure on some of the late February breakouts. Only the tech indices NASDAQ and NASDAQ 100 are clinging on to their respective 'buy' signals - but the Dow, S&P and Russell 2000 have all left behind bull traps. Volume came in higher, marking distribution - but overall trading volume remained below average. Best to be on the sidelines in this kind of market. Although the tech indices are above channel resistance, the NASDAQ closed below the mid-Bollinger band (20-day moving average) and looks set to test the lower BB band (and likely follow through down to the 200-day moving average), The NASDAQ 100 is hanging on to its 20-day moving average, but any weakness tomorrow will complete the break and send it on its way to the lower BB band and 200-day moving average.

Breakout failures: BFR featured as a breakout for Feb 7th suffered along with other banking sector stocks. SFCC featured as a breakout for Nov 4th, and again on Feb 25th, reversed its February breakout. PLXT featured as a breakout for Feb 24th, ended today on a neutral doji but it was enough to trigger the stop.

Breakout targets met:

Mar 8th: Markets reined in yesterday's bullish gains. The NASDAQ closed below the 50-day moving average (on lighter volume), as did the NASDAQ 100. The latter index did mark a bullish crossover of the mid-line of slow stochastics, but not all the bullish ducks were in a row as on-balance-volume crossed below the 20-day moving average. The Dow and S&P are holding their respective breakouts, but the Russell 2000 has put in the first steps of a 'bull trap' (the last three days complete a bearish evening star reversal) - although there is plenty of support below. In summary, 'buy' signal intact in all markets - but the Russell 2000 looks closest to negating the upside move (confirmed by a move back into the downward channel).

Breakout failures: none

Breakout targets met: none

Mar 7th: Interestingly, the laggards represented by the NASDAQ and NASDAQ 100 were the first indices to mark accumulation on a breakout. The NASDAQ closed over its 50-day moving average as the bearish divergence in the MACD trigger line was negated. The NASDAQ 100 also made a solid break of resistance, closing over the 50-day moving average with new near term highs in slow stochastics. The semiconductor index bounced off channel support on an ever rising ADX. Only the CCI of the semiconductor index remains the stickler in the mud for the bulls. The Dow couldn't build on morning gains - ending flat, but in the upper range of Friday's trading on slightly higher volume - a neutral finish to the day.

Secondary indicators [$NAA50, $NASI and $BPCOMPQ] remain mixed. The MACD trigger line of each indicator is below the bullish zero line - maintaining a bearish stance to the tech bounce. The ADX indicators are still in the red, with the exception of the $NAA50 - where the crossover of the +DI line above the -DI line (bullish) is countered by a downtick in the ADX.

In summary: All indices are on 'buys' but are tempered by an undercurrent of weakness with respect to low volume in the Dow and S&P, and weak secondary indicators for the tech indices.

Breakout failures: none

Breakout targets met: none

Mar 5th: So much for the hype. Friday should have been a big day - everyone appeared to be waiting for new highs to buy after days of testing resistance. The highs came, but where was the volume? The tech indices [NASDAQ and NASDAQ 100] may have closed higher, the NASDAQ managed to register a "breakout", but both indices remain vulnerable after an insipid Friday for the semiconductor index. As price is your primary lead, the Dow, Russell 2000, and S&P are all on 'buys', but a bull trap is still possible until the Big Money joins the move. Once there is a higher volume follow though we will have a confirmation of the breakout. A heavy volume sell off will confirm a bull trap.

Breakout failures: CRME clipped its stop on Friday's bullish hammer - chart still looks good. The stock featured on Feb 8th. GFF - early gains were crushed by weak Q1 profits. The stock limped to hit its stop price. The stock featured on Nov 5th.

Breakout targets met: CAT finally reached its price target after missing out the first time by $0.02. Follow on price target is $110 as part of a projected base. The stock featured on Sep 30th. GEOI starting to go parabolic. Surpassed its initial price target for a 40% gain, closing $0.40 above its target price - psychological resistance of $10.00 is next. The stock featured on Feb 23rd.

Mar 4th: Building pressure at resistance. Quieter day on low volume in anticipation of tomorrow's job report. Will it be the trigger for the next intermediate term move? Technicals are a mix. In the NASDAQ we have a MACD trigger line holding resistance, a bearish crossover in on-balance-volume, but new near term highs in slow stochastics - net bearish (just). In the Dow we have a series of resistance tests at 10,868 on overbought slow stochastics and rising on-balance-volume, as with the NASDAQ, the MACD trigger line of the Dow is below resistance - net bullish (just). The NASDAQ 100 has a slightly different mix. A bullish breakout from the MACD trigger line but no new near term high in slow stochastics - also net bearish. The Russell 2000 is above channel line resistance, but below the dominating three black crow resistance from January. Slow stochastics are overbought. A bullish crossover in the +DI/-DI line is supported by a MACD trigger line over bearish divergence resistance - net bullish. The semiconductor index shows strong upward momentum as measured by ADX over 30 and a well defined rising channel. But there is a well defined bearish divergence in the CCI, and further losses tomorrow will break channel trendline support. The S&P has the strongest technicals with new highs in on-balance-volume, overbought slow stochastics and a fresh breakout in the MACD bearish divergence. Prices remain below dual resistance of 1,214 and the former support line from November/December. The volatility index broke upside of the declining wedge - increased volatility means a big move, and today was the first day of the move - now we need price to decide if it wants to break resistance, otherwise its down, down we go.

Breakout failures: CPHD featured on Feb 15th.

Breakout targets met: none

Mar 3rd: Markets couldn't sustain early morning gains. Attempted breaks of channel lines in the NASDAQ and NASDAQ 100 failed, each market closing below resistance on heavier volume marking distribution. The NASDAQ 100 did show a resistance break in the MACD trigger line so a similar break in price is still on the table. The Dow and S&P had a third inside day in a row - swing traders will be itching to enter on the break (normally a move above/below the open or closing price but today's large range clouds the picture a little). Bollinger bands are tightening.

Breakout failures: IDBE featured on Feb 25th.

Breakout targets met: none

 

Mar 2nd: Both the tech indices [NASDAQ and NASDAQ 100] closed at resistance on lighter volume. Their respective MACD trigger lines have signalled a 'buy', but remain below bearish divergence resistance, as does on-balance-volume. Slow stochastics are also below the bearish mid-line. Strength comes in the shape of the semiconductor index which continues to power on. Note rising ADX line and clear breaks of the MACD trigger line and CCI bearish divergences. The 20-day moving average is the line in the sand for this index - as long as it holds as support it should keep the rally in the tech indices intact. It will need to push higher tomorrow if upside channel line breaks are to occur in the tech indices. The Dow and S&P are fast approaching a major swing event - today marked an inside day, of an inside day below major resistance. An upside break sets up a 500/45 point move, but equally - a break of last week's lows sets up a 500/45 point move down in these indices. Volume looks to favor the bears as technicals continue to struggle below bearish divergences. Only the Russell 2000 managed to break channel resistance, but is at risk of a triple top from January's bearish three black crow sequence (the orange line on the chart). Futures were down in all three markets as of 1:00 am ET.

Breakout failures: none

Breakout targets met: TIE featured on Feb 22nd for a modest 26% gain.

Mar 1st: In the Dow and S&P keep an eye on last Thursday's open for support. For the tech indices, watch the downward channel and wait for the upside break before considering long positions.

Breakout failures: EENC featured on Feb 22nd quickly reversed after breaking - wait for bounce to complete at $21 and take an aggressive short for a move to $14.

Breakout targets met: none

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