Oct 31st: The election looms large on the horizon, and the market waits anxiously for the result. How do the markets sit just prior to the election. The NASDAQ could go either way; the strong volume close over the 200-day MA combined with a strong weekly close are clearly bullish. But the Index sits at a long term resistance line (resistance is redrawn on the chart below to account for this - the original channel lines are the light blue hashed lines). Should Kerry win we could be looking at a swift dive down to the lower channel line (sub 1,700) as the "market unfriendly" democrat wins. We do have a convergence of various technical lines (moving averages and Bollinger bands) which will bring a big move with it. Look at a similar event in June with all three moving averages faked a breakout (bullish cross). A similar faked breakout looks to be building here.

What of the Dow? We look to be in a similar situation to that of July/August following a rapid relief rally on declining volume. The rally stalled in July/August at the 20-day moving average, a similar even looks to be in play here. New lows in on-balance-volume doesn't bode well for the bulls. Unlike the tech indices [NASDAQ, and NASDAQ 100], or the S&P there is no accumulation going on here. This index remains the most vulnerable to a Kerry win.

What of the S&P? This has experienced the strongest accumulation of all the markets - but it too has its vulnerabilities as the moving averages converge. The S&P did sell off in July/August along with the Dow, but the current technical picture is stronger now than it was then. Given that, I think there is roon for a rally to the upper Bollinger band (c1,144) before it too rolls over (likely the last market to capitulate). Any sell off in the S&P or NASDAQ should make it all the way to the lower channel line as marked by the black hashed lines on these charts. Based on this, short positions look favored (the NASDAQ now, the S&P by the end of the week).

A brief commentary on oil. The current move looks to be a correction to the 50-day moving average. Shorts should cover here and reassess price action should the 50-day moving average fail to hold as support.

Breakout failures: CELL featured on Sep 15th hits its stop for a 9.21% loss. CATT featured on Oct 25th clipped its stop for an 8% loss, but ended the day higher on a bullish hammer.

Breakout targets met: ARBA featured on Sep 20th reached its target for a 49% gain prior to been featured again on Oct 29th for a new price target of $23.50.

Oct 27th: The last of the shorts scrambled to cover as markets rose in lower volume, assisted somewhat by the decline in oil prices. The S&P is leading the markets and sits just a few points shy of ending the lower high, lower low sequence dating back to the start of the year. Should this index manage to beat 1,145 it will begin the next (and likely final) leg of the rally started in 2003. Technicals have improved in all markets - a bullish sign.

Oct 26th: The second day of accumulation in a row, pushing markets to their resistance levels. The tech indices [NASDAQ, and NASDAQ 100] sit at the upper end of their trading ranges. The NASDAQ 100 actually managed to break resistance, but the governing Sox did not confirm this move with an upside break of the ascending triangle. The Dow tested the 10,000 level while the S&P is fast approaching former support of the rising trendline (now resistance c1,132). Secondary indicators are indicating the start of a new rally, the question now is can today's gains hold? If we close down, but in the upper range of today's trading I would consider that bullish.

Breakout failures: WOOF featured on Oct 25th had a roller coaster day, closing higher but hitting its stop for a 3.76% loss.

Breakout targets met: ISRG featured on July 12th and 28th closing for a 51% and 28% gain respectively.

Oct 25th: Continued weakness in consumer confidence did not inspire further selling, indeed it did little to prevent a solid accumulation day, negating all of Friday's losses in the Dow, Russell 2000 and S&P. The tech indices [NASDAQ, and NASDAQ 100] fared less well, although gaining on higher volume, neither index was able to cut back more than 50% of Friday's losses. Both tech markets are trading below the rising trend channel from August lows - whether today's test of it's former support (now resistance) is significant will be determined tomorrow. If the channel line is resistance there should be no gains tomorrow in the tech markets. The governing Sox remained in limbo, although the ADX line (a measure of trend strength) has begun to tick up in favor of a rising trend, leading to a probable break of a bullish ascending triangle (a common bullish reversal triangle) in the index (as marked in grey on the chart). The MACD trigger line (in the Sox) slightly favors the bulls although it's current flatness could swing either way. The day looked to me as sector rotation from tech into beat down Dow and S&P stocks in the run up to (and the eventual conclusion of) the election. It should be a clear cut victory, all this "too close to call" is media spin which has kept the markets nervy. Once the decision is in, the market will rise. Unfortunately, there is still a large degree of complacency as marked by the low volatility index. If we do have a tight election with lawyers and their kitchen sinks involved it will spark a rise in fear as indecision will still control the markets. This should bring a capitulation that will bring a rapid drop and rise as the year's woes are flushed out of the market.

Oct 22nd: Do I eat my words from yesterday? Based on today's showing it looks like I should be. Amazon's big tumble and Microsoft's earnings disappointment reversed yesterday's bullishness and slipped the tech indices back into their trading ranges. Unfortunately, Google's huge move could not be accounted for by the tech averages. Google now has a market cap comparable to Yahoo ($46b to $47b). The NASDAQ, and NASDAQ 100 would have likely had finished weaker even if Google as part of the averages, but it may not have looked as bad as it did. The Dow was the day's main casualty as it said goodbye to 9.800 support. This was to oil's gain.

Oct 21st: I think we are finally getting some support in the market. The tech indices NASDAQ, and NASDAQ 100 are now leading the broader Dow and S&P averages with solid breakouts in both indices. The Dow ended the day with the second of two "hammers". Today's higher volume combined with yesterday's volume increase mark both as technical distribution days, but in this situation (trading between 9,800 and 9,900 just as the market did in early August when the Dow found support) I would view the volume action as bullish. Caterpillar's earnings was the day's Dow drag, as some of the larger pharmaceutical companies continued to struggle. But wise buyer's step in when things look bleak and recent volume action has the look of pre-election buying (retail buyers will be late to the rally, providing the momentum and the big volume action as today's buyers dump off on them once the election is decided). The Dow has acted the inverse of oil. Today's bearish harami cross will keep oil speculators skittish as yesterday's gains failed to follow through with further upside today - another bullish marker for the equity market. Oil prices have extended too far beyond the 200-day moving average. Oil's fair value may be $50+, but prices look set to swing violently in the opposite direction.

The NASDAQ made a solid higher volume break from its bullish flag. The NASDAQ 100 went one better and closed at new highs. What has been impressive from the standpoint of the tech markets has been the strength of the technical indicators. Unlike the broader averages, these markets have held their bullish stance (as marked by the green hashed line - indicating MACD, on-balance-volume, and slow stochastics are all above their bullish tick levels). Driving today's breakouts was the swift reversal in the Sox. This index has moved from a bearish stance to a bullish stance in the space of a day, leaving a substantial bear trap in its wake. Also note how its technicals held above bullish levels. The only spanner in the works has come from weakening secondary indicators [$BPCOMPQ, $NAA50 and $NASI], which tend to lead the market. Should these turn upwards (ie cross their exponential moving averages to give the green arrow), then their recent declines will mark a bear trap and should lead to a substantial rally. Joining the tech markets in strength has been the small cap index, which relate to many of the stocks featured on this website.

Now is the time to monitor the breakout list more closely. On the surface, the ratio of losers to winners has been almost 5:1! as whipsaw killed good positions before they had a chance to mature, but for breakouts made during the market bottom of Aug 4th to Aug 20th the score reads 7 price targets reached for an average gain of 25.47%, 4 failures for an average loss of 9.52% (an average return of 12.75% per trade), with 10 stocks still in play. Of the 10 stocks still in play, the average gain as of today is 1.99% per trade. Unfortunately, market bottoms produce few decent candidates, if you run through the breakout archive for this period you will see 16 "scratches" (ie. no suitable breakout candidates). As the breakout list started at the end of May I don't have data for the breakout success rate of the May 10th-24th bottom, but it will be interesting to see how the current market bottom breakouts do by Christmas. Gold member picks had a higher proportion of failed trades, due to tighter stops and failed short trades. There were 3 winners for an average gain of 13.18%, 29 losing trades for an average loss of 4.46% (for an average loss of 2.74% per trade), with 10 stocks still in play. Of the 10 gold member stocks in play, the average gain as of today's close is 14.02% per trade. Gold member plays cut losses earlier and let the big gainers run. This analysis is based on my fixed target and stop prices. A more actively managed account using raised stops and GTC buy orders would have substantially improved on this return.

Breakout failures: ELGX featured on Aug 20th and Sep 17th.

Breakout targets met: none

Oct 19th: Update to follow soon. Markets remain caught within election indecison and are likely to stay this way until the election is over. Markets hate indecision, reflected by the failure of bull or bear to take command.

Breakout failures: LPSN featured on Sep 3rd. SIMG featured on Oct 4th. MOBI featured on Sep 13th.

Breakout targets met: none

Oct 17th: The markets spent Friday recovering from the prior two days of selling. Neither bull nor bear had control by days end, although higher volume may have given the decision to the bulls. The Dow remains the index to watch as it approaches August lows. It will be interesting to see how tight trading in early August holds as support now. A busy week ahead on tech and pharmaceutical earnings front with the CPI reading on Tuesday to add to the fun. Given the oversold (and rising) condition in volatility I suspect it will be another hard week for the NASDAQ, and NASDAQ 100. Weakening secondary indicators [$BPCOMPQ, $NAA50 and $NASI] will add to the tech malaise. The one plus on the trade signal front will be support at 350 in the Sox. I would look to place aggressive buys in tech stocks as this index tests this level. The S&P remains stuck between positions; lurking at near term support of 1,101 but vulnerable to losses back to 1,060. Small caps [Russell 2000] are retracining in an orderly fashion into fib retracements - but it still looks too early to be buying here.

Gold prices remain overbought, although gold stocks look to have priced in much of the inevitable pullback in the base metal. At June, July support levels these stocks look attractive buys.

Oct 15th: Update to follow this weekend.

Oct 13th: The last couple of days of flat action gave way to a torrent of selling. Good news from INTC and YHOO was insufficient to keep the markets afloat after a strong open in the technology markets. Leading the move down on the back of oil concerns in Mexico and Nigeria were the Dow and the S&P. Point losses in the tech indices [NASDAQ, and NASDAQ 100] were lighter, but these markets had toppled from the big gap open. Hope for the bulls came from the Sox which continued to trade within a bullish ascending triangle. Small caps [Russell 2000] were not immune to the damage as traders rushed to take profits. Secondary indicators remain mixed, the $NASI put in a bear trap as its recent high was not confirmed by the MACD, so we are likely to see further downside until this snaps out of its bearish malaise. Volatility also took a leap, so we should see some fear selling which will help put a bottom in this decline.

What are we looking for? The bulls will want to see light volume as we head to August lows. We have yet to see a break in the lower high, lower low sequence dating back to the start of the year, but if markets start finding support before we see a test of August lows we will be well positioned for a rally. How will we know if such a low is made? We will look to secondary indicators ($NASI) and a break of near term highs as marked by 4-week highs for confirmation.

Breakout failures: AGT featured on Oct 11th hit its stop for a 6% loss. DWSN which was featured yesterday hit its stop for an 8% loss. FOSL featured on Sep 27th fell for a 8.45% loss. SWC featured on Oct 1st hit its stop for an 8.71% loss.

Breakout targets met: AIRT featured on Sep 21st and Sep 28th, reached its target for a 68% and 28% gain respectively. CETV featured on June 9th reached its target for a 35% gain.

Oct 12th: Markets again treaded water on light volume. The NASDAQ attempted a bullish piercing pattern, closing above support as defined by September congestion (a successful bullish piercing pattern should have retraced at least half of Friday's losses - I ignored yesterday's holiday trading). Technically, the pullback has done little damage, so there are buying merits at these levels. After hours news from INTC and YHOO will add to the bullish fervor. The NASDAQ 100 also attempted a bullish piercing pattern, but it ended the day below resistance, however, its technical picture remains strong. The Dow managed a bullish doji, resisting attempts to drive the index below 10,000. The Russell 2000 gained some footing on its doji, but has yet to mark a 38% retracement of its September rally. On today's doji it is an aggressive buy for a move to retest 592 resistance. The Sox continues to trade inside its triangle. But bullish news from INTC should bring it back to triangle resistance. The S&P managed a bullish doji of its own, and this should gain from likely strength in tech tomorrow.

Oct 11th: Columbus day kept trading quiet. Markets held station, we should see an increase in action as the week wears on.

Breakout failures: FAST featured on July 14th.

Breakout targets met: none

Oct 10th: From early week optimism too end-of-week woes, the market did an about turn last week. Disappointing jobs data put a palor of gloom on the proceedings. Earnings for next week will be the key fundamental drive. Technically, we will be looking at the degree of support mid-September congestion will provide (the grey boxed areas on the NASDAQ, NASDAQ 100, and S&P). For the Dow, we will be interested in how the broadening wedge acts as support as it did in September. Are there any bullish undertones to this negative shift? On Oct 6th I said the markets had the edge, technically, versus oil. If you look at the chart for oil you will see it is well beyond all of its moving averages. Although the MACD trigger line is at a new high, it sits at resistance of its previous peaks. Unfortunately, I cannot plot the volume, but even without that it appears oil is in line for an intermediate term correction lasting at least a month, a good time to short oil stocks? The coverage in the mainstream media would be of note to a contrarian.

In the NASDAQ, the MACD trigger line and on-balance-volume are at new 6-month highs, but still have room to move to resistance, implying a strong up trend. The last attempted breakout in late July had the on-balance-volume confirmation, but not the MACD trigger line to support it. The volume pattern is strong - declining in downtrends and rising in uptrends. The last reaction high of 1,971 marked its first test of the 200-MA. The next test should be good enough to break it. The best trade plan is to sell, move to the sidelines and wait for the reaction at the 20-day and 50-day MA. The latter moving average (now at 1,864) was support in September and it should be again if we are to see an election rally.

The spanner in the works remains the Dow which has failed to show the bullish traits of the tech indices. The September-October rally has the looks of a bear flag; weak MACD and slow stochastics, with a slow rising on-balance-volume trend below resistance. The volume pattern does look bullish on the main chart, but the breakdown form the bear flag does not give much reason for optimism (other than the potential for support at the broadening wedge as illustrated in my public stockchart of the Dow).

The S&P is the strongest index on paper - but all is not 100% warm and cosy here. The recent breakout has the looks of a bull trap, as confirmed by a failure of the MACD trigger line to regain a prior breakout. However, the 200-day MA and 20-day MA are nearby and it will be interesting to see how these act as support on Monday. It has a strong bullish volume pattern. Close to resistance it is a better sell than a buy. Bulls should look to the 50-day MA as a potential area to re-enter as this was an area of support in September.

Oct 9th: Fundamental scan updated. Stocks now featured on my public list.

Oct 8th: Update to follow. Public stockchart list features some new stocks, and some old ones were removed. Looking to update the fundamental scan over the weekend. In short, bears took control - negating last Friday's breakout. Best to watch from the sidelines. Technicals still look good, but if the selling continues these will break.

Breakout failures: LRT featured on Oct 7th failed to build on its breakout, closing down 2.97%, but leaving behind a potential double top. FOX also featured on Oct 7th hits its stop after a second day of declines

Breakout targets met: none

Oct 6th: Markets holding their resolve as oil prices inch higher. Which will win out? Oil hogs the headlines, but technically, the markets (the tech and small cap markets in particular) look to have the edge. The MACD trigger line of the NASDAQ and NASDAQ 100 have reached new 6-month highs. On balance volume in these indices are very strong. The Sox is forming a small handle around 400 and is well positioned for further gains on strength in its MACD which will be the fuel to push the tech markets out of its 10-month consolidation. The Russell 2000 is the first index to break June highs, and small caps continue to perform well. The Dow remains the market laggard, but it has managed to regain the breakout it lost yesterday, but still has some way to challenge September highs. The S&P sits 4 points shy of its June high, the actions of this index over the coming days will be key to markets as a whole. Neither its MACD nor on-balance-volume has not the strength of the tech indices, although on-balance-volume is at new 6-month highs which will provide the bulls with sustenance the S&P index itself can follow suit. There is not much for the bears to hold on, other than a lack of fear in the markets.

Plenty of strength in my public list. Of the precious metal stocks, KGC and the silver stocks [PAAS, SIL, SSRI] remain strong even at the mature stages of their advance. Big moves from featured breakouts including ATPG, ENWV, HXL, and IBAS. From my portfolio list, LEXR continues to rise in the run up to Oct 14th earnings. Interestingly, stocks on the most active list have underperformed, most, with the exception of SIRI, stuck in congestion ranges. LU managed to rise on higher volume. Other gainers from the members pick included ELGX (a breakout play), and IVAN.

Breakout failures: none

Breakout targets met: none

Oct 5th: Will do a detailed report on the market tomorrow - suffice to say, last weeks' breakouts are holding, only the Dow is showing evidence of a struggle. Although oil prices are rising, the markets are hanging on.

Oct 3rd: In the space of one day we have seen a dramatic shift from sell side pressure to bullish momentum. Shorts will be working double time to cover their positions as new buyers take advantage of market "clarirty". Concerns remain over oil prices (and commodities/ inflationary pressure in general) but there should be sufficient upside to push the markets to June highs. The real bonus was the accompanying volume, particularly in the tech markets, NASDAQ and NASDAQ 100. There are still some niggling concerns. Friday was a good day for the Sox, but the bull trap remains in effect until we see a close above it's highs (406.66). In addition, the Dow sits below 10,200 resistance and still has some work to do to break September highs, let alone June highs. The S&P sits at a make or break point, but the Russell 2000 shows where the strength lies in the market. Small caps generally lead new rallies, while larger caps lead the end phases of rallies. Small cap tech stocks look to be the place to search for value. Commodity stocks remain the momentum favorites, watch for a breakout in the commodity index.

Oct 1st: Update to follow. Excellent day for the bulls - psychological resistance broken.

Breakout failures: none

Breakout targets met: CAND featured on Sep 10th reached its target for a 50%+ gain. UHAL featured on Sep 9th reached its price target for a 19% gain, it exceeded the price target today. GRMN featured on July 29th reached its near term target for a 14% gain

Stockchart public list - please remember to vote!

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