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Newsletter, Members Click HereSeptember 30th: It was another relatively quiet day for the markets as bears made their presence felt into the closing hours, but were unable to push markets down enough to break below Thursday's lows. Volume eased in line with the quiet action. Technically, there was little damage done. The areas to watch on Monday will be support in the Russell 2000 and semiconductor index; both are key lead indices for bull markets; both are underperforming relative to large caps [Dow and S&P] and NASDAQ 100 respectively; both are only a few points shy of a support break. The other changes came in the tech market internals [$NASI, $NAA50 and $BPCOMPQ] as the $NASI generated a 'sell' trigger in the CCI, and the $NAA50 produced a bearish cross of the 5-day EMA as a small pennant formation takes shape around 1,250 resistance.

You will notice a change in the icon for October, switching from Bull to Bear. I suspect a 6-month top will be in place some time during October. It is not a cue to sell everything on Monday, but is instead a warning sign to limit taking new positions, to tighten stops in existing positions (to the most recent reaction low), and start building up cash reserves for the next reaction bottom. When I called a bearish turn in February of this year, the NASDAQ 100 and semiconductor index had topped in January, but the NASDAQ clung on until April and Small + Large caps held up until May. The rally is running on thin air - but fumes can be potent intoxicants.

I have maintained a bearish 30-day stance in the Blogger Sentiment Poll for a second week in a row. Bearish sentiment reached its highest recording since the poll started in July. How will it play out?

Target hit: none

Stop hit: RAH featured as a Breakout for August 10th and again for September 11th. The former play closed for an 8% gain, the latter a 5% loss. AXS featured as a Subscriber pick for August 8th and September 29th, and as Breakout for August 16th. The Subscriber plays closed for a 17% gain and a 1% loss, the Breakout play closed for a 9% gain. GSTL hit its raised stop. The stock featured to Subscribers for July 6th and September 14th; the former closed for a 27% gain, the latter closed flat.

Newsletter, Members Click HereSeptember 28th:Yet another non-event of a day for the markets. The area of potential concern (for bulls), other than the overbought nature of the markets, is the return of low volatility. During September, tech volatility failed its second test of the 50-day MA and cut below the 200-day MA on its way to retest 16. But unlike the huge intraday ranges from May through to October volatility has slipped back into April 2006 like trading, and it is plain to see how that turned out. There is a bullish divergence emerging in the MACD trigger line - further fueling an upcoming bounce and a break from the lull of the last couple of weeks. I still favor a top in October.

Of the tech market internals [$NASI, $NAA50 and $BPCOMPQ], the $BPCOMPQ is right up against resistance. Bulls can take heart from continued strength in supporting technicals (new near term highs in +DI = very bullish). Bears will see another tech market internal struggling along with the $NAA50.

Target hit: none

Stop hit: AFR hit its stop after failing to hold its breakout. The September 18th Breakout play closed for a 7% loss. KOOL slammed into its stop after a series of sharp down days. The September 19th Subscriber pick closed for a 6% loss.

Newsletter, Members Click HereSeptember 27th: A day of consolidation or a day of churning? Higher volume ranked as accumulation for the Dow and distribution for the NASDAQ 100 - but really, the changes were so small to consider it one thing or the other. After significant gains, it is not unusual to see these quiet days. Bulls will need to watch for situations when strong morning or early afternoon gains, give way to afternoon selling. Other than that, key moving averages and/or support still hold. Market internals [$NASI, $NAA50 and $BPCOMPQ] were unchanged too.

Target hit: none

Stop hit: DYN featured as a Subscriber pick for July 24th and a Breakout pick for August 16th. The former play closed flat, the latter for a 6% loss.

Newsletter, Members Click HereSeptember 26th: Large caps took the prize into the close as both the Dow and S&P broke past resistance to close at new multi-year highs. Volume climbed to register an accumulation day, but other indices didn't enjoy the same level of gains - although all indices did close higher. The key area to watch for these large cap breakouts will be combined support of the bearish wedges, in conjunction with the bullish divergences in their respective MACDs. If these breakouts were to reverse it could turn ugly, fast. For those who follow my blog I noted how the level of buying from my Trade Ideas scan was relatively light - surprising given the importance of today's technical breaks.

The NASDAQ 100 was able to close at new near term highs, but didn't challenge any major resistance area but instead pulled away from 200-day MA support. The semiconductor index closed slightly down, but held its 20-day MA. There was no change in the bearish divergences of supporting indicators. The only area of note came in the Nasdaq Stocks Above 50-day MA ($NAA50); the battle at 1,250 resumed with another bullish (whipsaw) cross of the 5-day EMA. This followed a bounce off the bullish divergence in the supporting Ultimate Oscillator, but the developing bearish divergence dominates both this indicator and the MACD trigger line.

Target hit: none

Stop hit: HMSY declined far enough to register a stop hit, but did close the day with a large (bullish) piercing pattern - a new 'buy' would trigger on a close over the 50-day MA, stops on a loss of Tuesday's lows. The stock featured as a breakout for June 26th and August 2nd; closing for a 2% gain and a 5% loss respectively.

Newsletter, Members Click HereSeptember 25th: Markets were able to put some distance from their Friday troubles. The S&P is on the verge of an important resistance breakout which would complete a 5-month base and should help the Dow do likewise. The tech averages [NASDAQ and NASDAQ 100] regained 200-day MA support. The semiconductor index bounced at a point which suggests a new upward channel is in effect. Finally, the Russell 2000 pushed off its channel support and the 200-day MA. There was no change in relative strength, so the bearish alignment of markets {Tech Indices > Large caps > Small caps} remains in play.

As for supporting tech market internals [$NASI, $NAA50 and $BPCOMPQ] there was a 'sell' trigger given in the $NASI, but the 5-day EMA held as support. This is the first sign of weakness for this indicator since it made its technical bottom in June (the $NASI made its actual bottom in the following month). If this scenario was to repeat, then look for the $NASI - and by association, the tech averages [NASDAQ and NASDAQ 100] - to peak some time in October. I am holding to my 'bearish' outlook for the next 30-days and will be more confident of a 6-month cycle top should tech market internals [$NASI, $NAA50 and $BPCOMPQ] continue to weaken. As for trading strategy; hold what you have, avoid new long term buys and stick to momentum - which tends to surge as the top approaches - if you can't resist a dabble in the markets.

Target hit: none

Stop hit: FIX clipped its stop at intraday lows, closing under its 200-day MA. The September 19th Subscriber play closed for a 5% loss. TIE failed to hold its 200-day MA, edging down to its September 19th stop price for an 8% loss.

Newsletter, Members Click HereSeptember 23rd: Lower volume will have disguised the bearish tone for the day. The tech averages [NASDAQ and NASDAQ 100] struggled at their 200-day MAs. The large caps [Dow and S&P] gave up ground while challenging 52-week high resistance. The Russell 2000 closed along combined channel support and the 200-day MA while the semiconductor index sought respite at the 20-day MA. There was a shift in relative strength as Large caps jumped above Small caps to align markets in a more bearish stance {Tech Indices > Large caps > Small caps}.

The Dow and S&P are each treading fine lines as their MACD trigger lines crossed to trigger 'sell' signals while price held support of 4-month bearish wedges. Price support was marked by similar support in the MACD trigger line. Interesting times for these indices - technicals suggest the bearish wedges will break (Monday?). However, when support is tested long positions are favored - so confirmation of a break will be needed (1% break) before one can call the 4-month rally over and a new downward/sideways pattern under way. The semiconductor index also switched to a 'sell' in its MACD trigger line, influenced by the bearish divergence in the CCI and a drop in relative strength to the NASDAQ 100. With the 50-day MA at 429, I would not be surprised to see price follow the technical lead down to this potential support area.

Tech market Internals [$NASI, $NAA50 and $BPCOMPQ] shifted up a gear on the bearish front. The $NAA50 gave up 1,200 after struggling for a few days at 1,250-1,300 range resistance. The $NAA50 is influenced by the bearish divergence in the Ultimate Oscillator and the MACD trigger line, not to mention a resistance break in the bearish -DI line (following from the confirmed break of +DI support the previous week - a double whammy). There looks to be a more significant top in place than was previously anticipated. Both the $NASI and $BPCOMPQ weakened, but not to the extent of crossing below their respective 5-day EMAs. Technicals of each weakened slightly, but it is important to add that there are no bearish divergences at play in their supporting indicators (MACD, Ultimate Oscillator, +DI/-DI, or slow stochastics).

I have flip-flopped over the last 3 weeks for followers of the Ticker Sense Blogger Sentiment Poll. The sentiment poll asks for a 30-day outlook; I have gone for bearish, to bullish (last week), back to bearish (for this week). I don't like the action in the $NAA50 and with large caps trading around major resistance I think some sideways (to slightly downward) action looks favored. Small caps look beat and I don't expect the mini-upward channel, or 200-day MA of the Russell 2000 to hold out for long. If large caps were to break through 52-week highs on strong volume then it would greatly reduce the chance of seeing lower prices 30-days on from Friday (which would make my bearish call a bad one).

Target hit: none

Stop hit: The second day of declines knocked out a few more potential positions. ALFA was a Breakout play for September 18th. The play closed for a 3% loss. IIJI gapped down below its 20-day MA, but held its 50-day MA. The September 5th Breakout play closed for a 9% loss. NIHD clipped its raised stop at the very intraday low. The September 19th Breakout play closed for a 4% loss and the August 29th Subscriber pick for a 7% gain. IHG may (or may not have - can't tell if there is a tick error) have hit its September 9th stop price for a 3% loss. OATS was another stock to get whipped out on the intraday low. The September 20th Subscriber pick close for a 5% loss. MGI suffered 5 days of heavier selling to run into it August 28th Subscriber stop price for a 4% loss. KKD failed to generate the bounce off its 200-day MA, drifting to its September 20th Subscriber stop price for a 3% loss. LMNX reversed hard off its breakout. The August 29th Subscriber pick closed for a 1% loss.

Newsletter, Members Click HereSeptember 21st: For all the Fed hype, Wednesday's small gains were quickly reversed in a day of mixed selling. Large caps [Dow and S&P] pushed the biggest gain on Wednesday, but gave all of that back on Thursday, leaving behind a bearish 2-bar reversal at overbought slow stochastics. Add into that resistance as marked by all-time highs and one is left with a heady bearish mix. The Dow also threw in a distribution day like a dash of bitters. Small caps [Russell 2000] threw their own bearish reversal at resistance of June reaction highs. The small bullish channel is holding up, as is the 200-day MA. The MACD trigger line is close to a 'sell' trigger, to follow a confirmed 'sell' trigger in short term slow stochastics [14,3] and the CCI.

Tech averages [NASDAQ and NASDAQ 100] had their own problems, but the semiconductor index took the brunt of the selling. The latter index marked a 'sell' in the MACD and CCI, building on the bearish divergence in the CCI. It also gave up its position of strength relative to the NASDAQ 100. Look for a retracement to the 50-day MA c430. The NASDAQ and NASDAQ 100 each closed on a 'bearish engulfing pattern' as Thursday's selling engulfed all of Wednesday's Fed buying. Strengthening each bearish candlestick pattern was the convergence of short term [14,3] and intermediate term [39,1] stochastics at overbought levels. Bulls will take heart the selling did not break through their respective 200-day MAs.

Market Internals [$NASI, $NAA50 and $BPCOMPQ] barely battered an eyelid; the $NASI and $BPCOMPQ each gained as the $NAA50 fumbled around in the 1,250-1,300 range. An area to watch will be June reaction high resistance of 48 in the $BPCOMPQ. Why? If the secular bear is to return then I will not expect the $BPCOMPQ to push much past 50 before the market reverses into its next downward leg. Technically, the $BPCOMPQ remains strong - so something will prevail.

Target hit: none

Stop hit: CPL was able to close the day on a bullish hammer, but it clipped its September 5th stop price for a 5% loss and a 4% loss for the August 8th Subscriber play (ex-dividend). ABG was a Subscriber pick from June 1st. After trading in a sideways pattern for all of the summer it eventually gapped down and rallied into its stop for an 8% loss. ANDE gave up its narrow range above the 200-day MA. The stock closed below the 200-day MA and stop price for a 3% loss. CALM dipped deeper below support than was usual in the past to hit its August 31st stop price for a 7% loss.

Newsletter, Members Click HereSeptember 19th: The coup in Thailand added some spice to the days action, YHOO's lowered guidance threw in its 2 cents, but in the end the day finished much as it started. Other than a possible break of the 200-day MA in the NASDAQ 100 (and this is a coin toss, it only closed 8 points below) there were no great changes in other indices. Volume registered a distribution day in all tech markets, but large cap indices [Dow and S&P] evaded the YHOO carnage. The $NAA50 was again the focus of tech market internals [$NASI, $NAA50 and $BPCOMPQ] as it dipped below the 5-day EMA, to register a 'sell' signal at dogged 1,250-1,300 resistance. The remaining two market internals continued their advance.

I had mentioned in my blog about reacting to "what the Fed does" when it really is about "how the market reacts". All eyes are on Wednesday afternoon.

Target hit: none

Stop hit: FISV was hurt by volatility. The September 14th Breakout play closed for a 3% loss. The September 1st Subscriber pick closed for a 3% gain. GETI suffered its third day of heavier selling to breeze through its suggested stop price. The July 13th Breakout play closed for a 2% loss while the May 19th Subscriber play closed for a 10% gain. RBN closed above support on a bullish hammer, but not before hitting its stop for a 5% loss.

Newsletter, Members Click HereSeptember 18th: Yawn! All eyes will be on the Fed so don't expect Tuesday to be any different to Monday. The only changes came in tech market internals [$NASI, $NAA50 and $BPCOMPQ]; the $NAA50 struggled around 1,300, while the $BPCOMPQ and $NASI pushed small gains. With the exception of the $BPCOMPQ, market internals are fast approaching overbought levels - which will likely be reached by October. Will markets make new near term highs? Or indicate the end of the cyclical bull market? The other factor to watch is volatility. It is shaping a double bottom at 16.07/16.30 (confirmation will come on a break of 21) - rising volatility is more likely to represent bearish fear rather than rampant buying. A resistance break in the MACD trigger line lends further weight towards increased volatility. Wednesday will be interesting - if I was to stick my neck out I would think whatever the Fed says or does will be greeted favorably by the markets, pushing a blowout run which will end sometime in October.

Target hit: ITWO featured as a Breakout for August 15th and closed for a 20% gain.

Stop hit: ARTG closed below its September 7th Subscriber stop price for an 8% loss.

Newsletter, Members Click HereSeptember 16th: Options expiration skewed the volume picture, but the small gains across the board were more bearish than bullish. The small black candlesticks in the NASDAQ and NASDAQ 100, reflected failed bullish optimism; the higher gap open in each index, gave way to a lower close - but, a close which was above the previous day's close. Large caps [Dow and S&P] didn't escape either, each index closed Friday with a bearish inverse hammer. The semiconductor index did something similar to large cap indices, but closed on a bearish 'gravestone doji'. The Russell 2000 finished on a more neutral stance, but there is a lingering bearish tone to this index too. As noted earlier in the week, the Russell 2000 is the index to watch if you are a bullish the markets; small caps lead out from bottoms - and we have yet to really see that (on a consistent basis), since the index gave up its roll of leadership in early August. I have published a short piece available for download here [$], highlighting what to watch for in the months ahead for the relationship between the S&P and Russell 2000.

The good news (for bulls), both tech indices [NASDAQ and NASDAQ 100] finished above their 200-day MAs. Supporting technical indicators continued to advance, and other than minor bearish divergences in the MACD histograms, all favor a continuation of the tech rallies. Large caps [Dow and S&P] are threatening May highs, so it would not be unreasonable to see some downside, as prior supply is consumed. Also good news for the bulls was how the $NAA50 continued its advance past 1,250 resistance, with supporting technical indicators improving; most notably the Ultimate Oscillator, which regained prior bullish divergence support - to the extent it was necessary to redraw the support line of this indicator. This hasn't happened yet for the bullish divergence in +DI, but here again, there hasn't be a confirming break of resistance in the -DI either (or in English, the bullish trend is still intact, even though it is weaker than it was before).

For next weeks Blogger Sentiment Poll, I have switched bullish (after a brief, 1 week stint on the bearish side of the fence - which doesn't look likely to pay off over the next 3 weeks or so, of the reported outlook). Although near term weakness looks favored, there still appears to be enough bullish momentum to drive markets higher over a longer time frame.

Target hit: none

Stop hit: none

Newsletter, Members Click HereSeptember 14th: The picture changed little from Wednesday. Bearish wedge resistance from the Dow and S&P, looked ready to pop, but didn't. 200-day MA resistance in the NASDAQ 100 looked ready to pop too, but didn't. Volume dropped across all averages, repeating the 'boring' day's action. The good news, Tuesday's big (higher volume) gains held for another day.

There was a little more interest in the $NAA50. This tech market internal had supporting indicators (Ultimate Oscillator and +DI) up against resistance on Wednesday. Thursday's action held these resistances, as slight weakness pulled the indicators down with the overall indicator. It will be important to keep one's eyes on this indicator over the coming days, as bullish divergences present in the MACD, +DI, and Ultimate Oscillator, were the driving force behind the NASDAQ reversal [the greater the number of stocks trading above their 50-day MA, the greater the demand for those stocks].

Target hit: none

Stop hit: none

Newsletter, Members Click HereSeptember 13th: Small caps [Russell 2000] leapt over Large caps [S&P] in terms of relative strength, aligning markets in favor of continued bullish strength. The strongest set up occurs when Small caps [Russell 2000] lead Tech indices [NASDAQ and NASDAQ 100] - it hasn't happened yet, but if markets continue to act the way they are, then small caps should assume overall market leadership some time next week. The Russell 2000 is running up inside a narrow channel defined by August-September high/lows. Additional support comes in the shape of the MACD bullish divergence, running from June through to September. All eyes should be on the MACD trigger line of the Russell 2000 as a 'sell' trigger would likely lead to a break of the bullish divergence, and consequently, a break of the August-September price channel. How this will relate to other markets, will say much about how the overall June/July rally in the markets will run. Large caps [Dow and S&P] posted decent gains, with resistance breakouts of their own. Both the Dow and S&P are very close to challenging all time highs, but each have bearish wedge resistance to break, which will make either Thursday, or Friday, an important test for these indices.

Of Tech indices, the NASDAQ was the first to close above its 200-day MA. A NASDAQ 100 test of 200-day MA will probably occur Thursday, with the semiconductor index to follow suit a few days afterwards. Volume dropped from Tuesday signaling a respite from two days of higher volume gains. Should the NASDAQ hold above the 200-day MA, it would leave April highs as the next probable resistance area, and bode well for rallies in the NASDAQ 100 and semiconductor index (the latter index in particular) to continue.

Market internals [$NASI, $NAA50 and $BPCOMPQ] were interesting in that the most bearish of the three, the $NAA50, was able to inch a close above 1,250 resistance. Also of note, were the tests of former bullish divergences, now resistance, in the Ultimate Oscillator and +DI line of the $NAA50. If these resistances break, it would do much to back up the rallies in the tech indices [NASDAQ and NASDAQ 100].

Target hit: none

Stop hit: TGI crashed through the 200-day MA and stop price for a 3% loss. SHFL gapped down, but rallied into its stop price. The August 14th Subscriber pick closed for a 5% loss. SPF joined the only other (premature) short on the list with a stop hit. Bulls pay attention - it could be a runner. The September 7th Subscriber pick closed for a 9% loss.

September 12th: A solid bullish day, to follow the last such day at the start of September. This put a large dent in my thoughts of seeing a bearish 30-days, which was my point-of-view for the most recent Ticker Sense Blogger Sentiment Poll. Tech markets were the big winner; the NASDAQ, NASDAQ 100 and semiconductor index all made substantial gains to close at new near term highs. The Dow managed likewise, but the Russell 2000 and S&P were not quite so lucky. The Russell 2000 did push through its 200-day MA, something which the tech indices have yet to do (although their day of reckoning could come as soon as Wednesday). But there was no denying it was a strongly bullish day.

The large gains were enough to reverse bearish turns in the market internals [$NASI, $NAA50 and $BPCOMPQ]; earlier bearish crosses of the 5-day EMAs in the $NAA50 and $BPCOMPQ were quickly quashed by bullish crosses of the 5-day EMAs on Tuesday. There is still much technical damage to overcome in the $NAA50, but with the $BPCOMPQ closer to oversold, than overbought, territory - it does bode well for bulls for the June/July market rally to continue.

Target hit: none

Stop hit: Commodity bases stocks took it on the chin. BRR hit its stop after completing a broad bullish hammer, which unfortunately clipped the stop - although found support at the 50-day MA. The August 31st Breakout play closed for a 12% loss. AEZ featured as a Breakout for August 10th. The play registers as a 10% loss - but had racked up gains of 22% at its highs in early September.

Newsletter, Members Click HereSeptember 11th: Volume climbed to register an accumulation day, which for many indices, occurred at an important price support levels. For the NASDAQ, NASDAQ 100 and semiconductor index, this was support was at the 20-day MA. For the S&P it was along July-September support. For the Russell 2000 it was the 50-day MA. The Dow traded a few points below former wedge support - now resistance.


The NASDAQ generated a 'sell' trigger in the MACD, which also occurred in the Russell 2000. The semiconductor index regained some of the lost ground from its breakout reversal, and may potentially form a consolidation triangle (depending on how near term highs hold as resistance). Monday also saw a bearish cross of the 5-day EMA in the Nasdaq Composite Bullish percent index (percentage of Nasdaq stocks on point-n-figure buy signals) $BPCOMPQ, but supporting technical indicators of the $BPCOMPQ remain firmly bullish.

The market continues to make small stabs in the bull, but as yet - it is not enough to bleed it to death.

Target hit: none

Stop hit: Unlike previous sell-offs, this one, although small at the index level, has hit the commodity based stocks hard (a good thing for bulls - leadership for a new bull market rally has to emerge from other sectors - traditional strong areas in weak economic environments like consumer staples and utilities are behaving as expected and are best bets when they emerge on my scans). NGAS featured as a Breakout for August 1st. After posting gains of 12%, it quickly reversed into an 11% loss. PHM clipped its stop at the high of the day. When bad news fails to push the stock down, it is time to buy. Potential longs could run a stop on a loss of $27. The September 7th Subscriber play closed for an 8% loss. TRMA undercut near term support, after crashing though the 50-day MA. The July 17th Subscriber play closed for a 9% loss. WCC featured as a Subscriber pick for September 8th. The stock closed below the 200-day MA to register as a 3% loss.

Newsletter, Members Click HereSeptember 9th: A weak, positive day, to close the week. Wednesday's break of support for the NASDAQ and NASDAQ 100 was not challenged. Neither was the Dow able to regain the support it lost on Thursday. Although, the S&P was able to close the week along July-September support. The trouble also spilled over into the Russell 2000, where it reversed its break of May-September resistance, and its break of the 200-day MA, to close below May-September resistance. The Russell 2000 finished the week just above the 50-day MA, but has left behind what looks to be a bull trap. Similarly, the semiconductor index reversed what had been a nice. mini-breakout, only to close on the 20-day MA. The index remains vulnerable to further weakness as the drop triggered a 'sell' in its MACD trigger line - reversing the 'buy' trigger from July.

The individual markets all seem to point to further weakness. But, each has done enough from July to at least offset what could have been a total meltdown from the May-July decline. Nothing is sacred, and shifting money off the table at this stage would be prudent. A retest of July lows looks the most likely scenario from now into October, but a break of September highs would be reason enough to start buying back into the market.

Target hit: none

Stop hit: The week's poor action continued to knock out September stops. CLB featured as a Breakout for September 6th and July 28th. The former play closed for a 9% loss, the latter a 3% gain. ASFI was a Subscriber pick for September 5th, which hit its stop at the very lows of the day. The play fell for a 7% loss. ENDP was a Subscriber pick for July 3rd, which fell to the 200-day MA, but still managed to hit the stop price for a 7% loss. TDW wasn't able to hang on to the 200-day MA, failing to break on its second attempt in late August. The August 2nd Subscriber pick crashed through its 50-day MA, and stop price, for an 8% loss. WOR was a Subscriber pick for September 6th. The gap breakout failed to hold as support (although it is a fine call - some may consider Friday's tight trading as bullish). For my purposes it is a stop hit for a 6% loss.

Newsletter, Members Click HereSeptember 7th: The selling picked up a bit more steam as a second distribution day took control of the markets. The 'sell' trigger in the MACD of large caps [Dow and S&P] occurred Thursday. The Dow also lost July-September support, while the S&P closed on this support line. The 50-day MA remains a favored downside target, with the Russell 2000 the first to test this important support level. Unfortunately, the Russell 2000 failed to hold channel support, so the 50-day MA may not be boost it might otherwise be. The semiconductor index closed on the 20-day MA, while triggering a 'sell' in its MACD. The 50-day MA some 13 points below (422) may be the point at which demand increases.

Of the market internals [$NASI, $NAA50 and $BPCOMPQ], the $NAA50 followed yesterday's resistance reversal with a break of the +DI bullish divergence and an Ultimate Oscillator 'sell' trigger. The $NAA50 is over 400 points away from oversold levels (and 700 points from June lows), so it could be a while before this tech market internal suggests it is time to buy stocks.

For those following the Ticker Sense Blogger Poll, I have switched my opinion from 'bullish' to 'bearish' for the next 30-days (I have been 'bullish' the market since the poll started in July). However, I remain bullish over a longer time frame (or at least until there is a more substantial reversal at hand than that we are seeing now e.g. loss of 50-day MA in all indices). Act accordingly - sell stocks which are below your entry price, raise stops to breakeven where possible in recent buys, and tighten stops to the most recent reaction lows for stocks in profit (e.g. 3-week lows - lows from the last correction in late August).

Target hit: none

Stop hit: HPLF failed its triangle break, cutting below triangle support on the second day of selling. The August 31st breakout closed for a 15% loss. KAI failed its second breakout for August 31st. The original stock featured for August 14th closed for 3% gain and the latter a 7% loss. AQNT broke below August lows, and its 50-day MA, after failing to regain the 200-day MA on a breakout reversal. The August 16th Subscriber play closed for an 8% loss. RDN was a Subscriber play for July 21st. The stock drifted back in drip losses, to hit its stop for a 9% loss.

Newsletter, Members Click HereSeptember 6th: The markets shuddered as days of baby steps up, reversed with a giant step down. Volume climbed, to register a clear distribution day. The losses were enough to break near term support in the NASDAQ and NASDAQ 100, and kill the break of near term resistance in the semiconductor index. Losses in the large caps [Dow and S&P] didn't damage their rallies to the same degree as tech indices, but the MACD trigger line in each of these indices has to be watched for an upcoming 'sell' trigger - not helped by converged, and overbought short and intermediate term stochastics. The set up in the large cap indices is very similar to that of early August - if this was to repeat, then look for a test of the 50-day MA; for the Dow this would be a move back to 11,162; and for the S&P, it would be 1,275.

The Russell 2000 ran into trouble of its own, cutting below the 200-day MA, but stalling at support of its May-September channel resistance (current support).

But the key worry was the picture perfect reversal of the $NAA50 [Nasdaq Stocks Above 50 day MA] off 1,250 resistance. It hasn't been confirmed (yet) by the MACD trigger line, but short term stochastics [14,3] have triggered a 'sell'. Also threatened are long standing bullish divergences in the Ultimate Oscillator and +DI line of ADX of the $NAA50. The remaining two tech market internals [$NASI and $BPCOMPQ] have not turned so negative, but the take home message would be ease up on taking new positions in this market, until supporting indicators drop out of their overbought state (it will probably take a couple of weeks for this to happen).

Target hit: none

Stop hit: GMR continued to struggle, closing below its 50-day MA and into its August 9th stop for a 7% loss. SNX featured first as a Breakout for June 26th and again for August 30th. It also featured to Subscribers for July 20th. The two Breakout plays closed for a 10% gain and an 8% loss. The Subscriber play closed for a 6% gain. ARG was a Subscriber pick for September 5th, but it failed to break resistance, reversing to new near lows instead. It closed for a 4% loss.

Newsletter, Members Click HereSeptember 5th: The day started weak, but picked up steam as the afternoon wore on. Volume climbed, to register an accumulation day in the NASDAQ, NASDAQ 100, Dow and S&P. On-balance-volume of the Dow also breached resistance. The best news for bulls, has been the strong trend in the MACD trigger line of the tech indices [NASDAQ and NASDAQ 100], including the 'laggard', semiconductor index. The battle of relative strength, remains a tussle between small caps [Russell 2000] and tech indices [NASDAQ and NASDAQ 100].

The S&P is testing resistance of 1,314, as short term [14.3] and intermediate term [39,1] stochastics converge at overbought levels. Market internals [$NASI, $NAA50 and $BPCOMPQ] climbed, pushing them a step closer to overbought levels (but as before, the $BPCOMPQ has plenty of room to run before it turns overbought). Volatility looks ready to challenge former support (now resistance) c21.50, as the indicator shaped a bullish morning star at the 200-day MA.

Target hit: none

Stop hit: HSY took a sharp reversal through its 200-day MA, after positng a mini-breakout last week. The stock was downgraded by J.P. Morgan. The August 28th Subscriber play closed for a 2% loss.

Newsletter, Members Click HereSeptember 1st: The market has set up its stall for next week. Volume was not surprisingly, limp. The only real movers on the day were large caps [Dow and S&P], each of which broke to new near term highs. The NASDAQ closed at June's reaction highs, as did the NASDAQ 100, but bullish momentum, as measured by their respective MACD trigger lines, is firmly in the bullish camp. The Russell 2000 closed the week with its breakout intact, managing a positive test of new support (former channel resistance) and the 200-day MA. Of interest (but less noticeable), was its loss of relative strength to the tech averages [NASDAQ and NASDAQ 100] - something which had lasted all of one day, but a strong bullish market will need small caps in the role of primary leader {Tech > Small Cap > Large Cap: Overall market health is bullish but weakening}, and further weakness in this regard would not be good news.

Market internals [$NASI, $NAA50 and $BPCOMPQ] are all in neutral territory (with a bullish bias). The $NASI and $NAA50 are closer to overbought levels than the $BPCOMPQ. A substantial reaction may soon be in the offing (October?), but it may not be the one which kills the 2003-2006 rally given the $BPCOMPQ would quickly be pushed back to oversold levels. June/July reaction lows will be important support levels to watch on the next leg down.

Also of interest was volatility. It closed Friday on a 'bullish hammer', below the 200-day MA. More importantly, it found support at May congestion, and has likely set up a bounce to triangle support, current resistance, around 21.50. Rising volatility is normally associated with a fearful market - further evidence for a correction around the corner?

Target hit: none

Stop hit: none

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