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May 12th: Tech markets retreated on heavier volume as recent action fits with a short term top. The NASDAQ reversed off a test of declining channel resistance (and the 200-day MA). A short, sharp shock to 1,889 cannot be ruled out, but a move to 2,000 will end the 5-month decline. The NASDAQ 100 held resistance but volume did not increase over yesterday's. The tech indices remain well placed for further gains. The Dow ended the day lurking around yesterday's lows. Watch for a gap down on Friday the 13th as volume ticked higher into a distribution day. Overall, Thursday's volume in the Dow was below average suggesting today's selling was retail driven - but this pullback doesn't look complete. The S&P also backtested former channel resistance on higher volume. Unlike the Dow this index lurks at convergence support of the 20- and 200-day MA. It is often difficult to trade between the 50- and 200-day MA and the S&P is no different in this regard. Supporters of the Russell 2000 will be watching for a reversal head-and-shoulder pattern. 580 is the line in the sand here.

On a cautionary note - the limp ascent in the $BPCOMPQ has the appearance of that in February. A decent bottom should see a sharp move up before slowly drifiting into a retest (note the reverse descent when the market topped in December). The action here does not look particularly persuasive. In the defence of the secondary indicators, the $NASI has managed the look of a bottom.

Breakout failures: none

Breakout targets met: none

May 11th: A roller coaster day with the earlier D.C. scare knocking markets down before rebounding. Decent breakout candidates remain thin on the ground as the last few months of selling will take time to work its way out of the system. Today ranked as an accumulation day in the tech markets as the NASDAQ 100 and NASDAQ look set to follow the channel breakout lead of the S&P. The secondary indicators [$BPCOMPQ, $NASI, and $NAA50] again showed their strength, all rising today.

Breakout failures: none

Breakout targets met: none

May 10th: Started the short term pullback. The naysayers will be looking for this to tank quickly in line with their predictions. Markets did take a reasonable beating (>1%) on heavier volume - but net volume remained below average. Markets will fall when buyers are no show (i.e. active demand is needed to push markets against 'gravity'), and today was a good example of markets missing buyers rather than an influx of sellers pushing prices down. .

Breakout failures: MTN featured as a gold member play on November 11th and again as a breakout on May 6th. Today's stop hit may have been a shave too close in its initial placement. The stock ended on a doji with a low of $25.55 and still has good long side merits here.

Breakout targets met: none

May 9th: Markets edged up a little more placing them closer to resistance. Volume again declined, it wouldn't take a distribution day to knock markets off their pedestals (i.e. drop >1%). Most vulnerable looks to be the NASDAQ 100. The Dow and S&P continued to pressure resistance (10,400 and 1,184 respectively) although the light volume doesn't amount to more than a finger push. The Russell 2000 was mixed in that it broke near term resistance but still lies below critical 605. The chief good news on the day was the EMA crossover in the $BPCOMPQ. A secondary indicator bottom is in place for all three tech indicators [$BPCOMPQ, $NASI, and $NAA50] and this should be good for a 3-4 month rally. However, be prepared for a sharp pullback as recent advances on insipid volume are tested. Are we at a buying point? Yes. Strong breakout candidates will emerge over the next couple of weeks. Can markets get worse? Possibly (hence the need for stops), but long plays look favored over short (or cash) positions at this point. There is sufficient skepticism from market commentators ('pros' and 'amateurs') which is healthy action at a bottom. Another bonus; the last few days have seen few breakout failures - sellers exhaustion at work.

Breakout failures: none

Breakout targets met: none

May 8th: Friday traded like an extension of Thursday even with a 'positive' jobs report. Surprising the jobs report didn't bring a surge of volume as markets inched higher on lighter volume. Short term we are primed for a pullback. Long(er) term the next pullback should provide the buying opportunity we are waiting for. Still plenty of doom and gloomers out there, but the secondary indicators [$BPCOMPQ, $NASI, and $NAA50] don't conform with abject 'end is nigh' scenario. Further downswings cannot be excluded (and should be expected), but these should provide value buying opportunities. Never forget the stops. I would use recent two-week lows as an area for stops (and a place to define your base risk with respect to GTC buy orders - the closer to these lows you get fills the lower risk you take. The flip side is not all orders will fill - so using a range of buy orders down to these lows can be be used to get in the game). Although breakouts have been a disaster since January with only a handful of exceptions, new breakouts should be well positioned to give good returns over the next 2-3 months. Adding weight to the scenario the worst is over, Friday featured no breakout failures.

What of the markets? The tech indices [NASDAQ and NASDAQ 100] held about the 20-day moving average, although waiting for an uptick in this average is traditionally seen as the best time to buy. Solid breaks of near term resistance in each the MACD trigger line, on-balance-volume, and slow stochastics, adds weight to the strengthening (bullish) reversal. The Dow is knocking around its 200-day moving avearge, but the relatively tight trading in the upper range of last Wednesday's big move gives the nod to the bulls. Breaking resistance from March signals a shift from a downward trend to a sideways/upwards bias. The Russell 2000 is at a key resistance - what happens Monday will be key for this index. Friday's small doji is an ideal swing trade play. The S&P has taken over leadership as it has only the 50-day moving average to break to push this into a test of 1,191 (and then 1,229) resistance. From a price history perspective, 1,163-1,184 has been an area of support (December-March) and resisance (April-May?) making price within this zone irrelevant with respect to defining trend - only a break of 1,184 to the upside, or 1,163 to the downside will reflect bullish or bearish sentiment respectively.

Breakout failures: none

Breakout targets met: none

Model portfolio: ROL and ADSK added.

May 6th: Friday traded like an extension of Thursday, even with a 'positive' jobs report. Surprising the jobs report didn't bring a surge of volume as markets inched higher on lighter volume. Short term we are primed for a pullback. Long(er) term, this pullback should provide the buying opportunity we are waiting for. Still plenty of doom and gloomers out there but the secondary indicators [$BPCOMPQ, $NASI, and $NAA50] don't conform with abject 'end is nigh' scenario. Further downswings cannot be excluded (and should be expected) , but these should provide value buying opportunities. Never forget the stops. I would use recent two-week lows as an area for stops (and a place to define your base risk with respect to GTC buy orders - the closer to these lows you get fills the lower risk you take. The flip side is not all orders will fill - so using a range of buy orders down to these lows can be be used to get in the game). Although breakouts have been a disaster since January with only a handful of exceptions, new breakouts should be well positioned to give good returns over the next 2-3 months. Adding weight to the scenario the worst is over, Friday featured no breakout failures.

What of the markets. The tech indices [NASDAQ and NASDAQ 100] held about the 20-day moving average, although waiting for an uptick in this average is traditionally seen as the best time to buy. Solid breaks of near term resistance in each the MACD trigger line, on-balance-volume, and slow stochastics, adds weight to the strengthening (bullish) reversal. The Dow is knocking around its 200-day moving avearge, but the relatively tight trading in the upper range of last Wednesday's big move gives the nod to the bulls. Breaking resistance from March signals a shift from a downward trend to a sideways/upwards bias. The Russell 2000 is at a key resistance - what happens Monday will be key for this index. Friday's small doji is an ideal swing trade play. The S&P has taken over leadership as it has only the 50-day moving average to break to push this into a test of 1,191 (and then 1,229) resistance. From a price history perspective, 1,163-1,184 has been an area of support (December-March) and resisance (April-May?) making price within this zone irrelevant with respect to defining trend - only a break of 1,184 to the upside, or 1,163 to the downside will reflect bullish or bearish sentiment respectively.

Breakout failures: none

Breakout targets met: none

Model portfolio: ROL and ADSK added.

May 5th: Markets ticked along on quiet action on lower volume. Keeping an eye on the secondary indicators but no real change today. All eyes on Friday's jobs report.

May 4th: Solid gains as the 20-day moving average was sliced in a number of markets. The S&P was the best performing index on the day. It breached resistance of its downward channel and made new near term highs confirming what looks like an intermediate term double bottom. Only the 50-day moving average stands in the way of further gains. Volume picked up making today an accumulation day. Next up was the Dow. It ended the day at new near term highs as it broke a similiar resistance line drawn from March highs. It managed to close over the 200-day moving average but still has the 50-day moving average lurking overhead. Volume was average but it was enough to rank today as an accumulation day. Of the tech indices, the NASDAQ 100 had the better day, ending at new near term highs on higher volume. Unlike the Dow and S&P it remained inside a bearish channel and still has the 200- and 50-day moving averages to overcome. The NASDAQ followed market leads, but failed to mark new near term highs. It too is confined by a downward channel although on-balance-volume managed to end the day at new near term highs just as the MACD trigger line breached bearish divergence resistance. The Russell 2000 remains the laggard as it failed to get close to new near term highs and still have large supply at 605 to ovrecome (not to mention the 50- and 200-day moving averages).

Of the secondary indicators - all I waiting for is a bullish crossover of the 3- and 5-day EMA in the $BPCOMPQ to complete the bottom. Also interesting was the +DI/-DI crossover in the $NAA50. The bulls are buidling strength but it is imperative you keep control of your risk. Breakouts will be key for banking new gains - but as Sept 11th 2001 showed, you can have secondaries bullish at oversold levels but still suffer a meltdown.

Breakout failures: none

Breakout targets met: none

May 3rd: Markets have struggled since Friday's reversal. The Fed's decision to raise rates came as no surprise, although the reaction to the news was fueled by an accidental omission with respect to inflation. The resulting effect was to see markets fall, rise sharply, before giving up the bulk of their gains into the close. The key area to watch looks to be the 20-day moving average. The NASDAQ, NASDAQ 100 and Russell 2000 still have some room to reach this potentially important resistance. The Dow and S&P ended the day bang on the 20-day average and Wednesday will be provide an important lead as to what might happen from a similar test in the tech averages. Based on current form we should see renewed downside in the latter indices - if we don't it will mean something bullish is afoot.

Breakout failures: ONEI - featured as a breakout for June 28th 2004, and again for April 26th and as a gold member pick for November 1st. Returned a maximum gain of 80%. TVIN featured for March 16th.

Breakout targets met: none

May 2nd: Well, bulls got the higher close (just) - but the lacklustre volume didn't inspire confidence. We are at interesting times. A review of public stockchart poster opinion ranges from the bullish (Joe K Reed, Robert E. New, Chuck Bitsko), the undecided (Mitchell Meana), to the bearish (Ted Burge, Joseph Russo, Jack Chan). I still believe we are at a tradable bottom and it will take the extent of the next rally to decide if the bulls or bears are in control for the next 12 months. Long term support has broken - but that in itself does not mean an instance reversal, the most likely outcome is further sideways action with October 2002/February 2003 support acting as resistance on the next rally. The secondary indicators are so oversold that even a crash would mark an excellent buying opportunity - odds favor upside. Fear strikes when all looks grim, this is when the bulls make their move.

Breakout failures: none

Breakout targets met: none

May 1st: The see-saw continues. Thursday, the bears stole it from the bulls on price and volume. Friday, the bulls trumped the bears on price and volume. One day does not a rally make - but Monday will be interesting. The bulls have failed miserably to mount a rally of substance. In their favor is the heavily oversold nature of the secondary indicators [$BPCOMPQ, $NASI, and $NAA50] - only the $BPCOMPQ has yet to reach a long term bounce zone. But I would be more comfortable seeing a re-test of Friday lows (with a bullish divergence in the secondary indicators) before confirming a bottom is in place - but Friday does have the look of a bottom, buying the QQQQs, SPYs, or DIAs, with stops on a loss of Friday's lows may be worth a pop, or placing GTC buy orders at the latter lows would provide a much more satisfying risk:reward should such orders be filled. Its still too early to say if we have a rally which confirms the return of the bear (i.e. no new high made), or a rally which completes the bull market rally (i.e. a new high made) - but a bottom of force looks to be upon us. Irrespective of what actually happens don't forget your stops. Always play to the cautious side - new lows from here would likely create a bullish divergence to the secondary indicators and provide another buying opportunity. The spanner in the works is the volatility index - a measure of option pricing - it is deeply oversold which suggests a very big reaction move is not far off. This can be up or down - but whichever direction it moves in you don't want to be on the wrong end of the market.

Breakout failures: HANS featured for April 26th hit its stop Friday but ended the day on a bullish doji. HIBB featured for March 11th rolled over from a double top at $11.39. INNO hits its follow on stop from April 27th, but not before banking a 54% gain for gold members (Jan 27th). NUCO from March 28th got whipped out on Friday's lows but ended with a bullish hammer. PVA from February 17th hits it stop after a steady reversal from $50.52 highs. PQE from February 28th was a big loser on Friday, breaking down on heavy volume. RAD from March 11th confirmed its double top off $4.33 highs. ROST featured for March 4th got stop whipped from support of its trading range. SOLUQ featured from March 10th as a breakout play, and February 15th for gold members, managed a max gain of 38% for breakout players, and a minimum gain of 55% (max 184%) for gold members. TBL featured for April 20th crashed below its former support.

Breakout targets met: none

Model portfolio: ALDA added.

DD as always, DJF

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