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AaiiIndex posts

Today's technical outlook: How far can this rally go?

Posted Mar 13th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

On Thursday, the S&P 500 closed above the 20-day moving average at 745.10 for the first time since Feb. 9. And it closed above the resistance line drawn from the November low at 741.02 for the first time since Feb. 13.

Volume for each of the days of higher prices increased to more than 1.8 billion shares on the NYSE, and that is a higher-than-average volume for any month this year (1.6 billion average). But volume has been picking up since the breakdown on Feb. 27 at S&P 740 when more than 2 billion shares traded.

With a reflex rally now underway, the question is: "How far can it go?"

Continue reading Today's technical outlook: How far can this rally go?

Today's technical outlook: Are rallies doomed to fail?

Posted Mar 9th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA, NASDAQ

Late Friday, it looked like the market would suffer another loss until buyers (or traders who were covering shorts) salvaged the day with a 25-minute rally. But despite Friday's small gain, the week was the worst in memory for the Dow, as it fell 6.2%. The S&P 500 was off 7% and the Nasdaq dropped 6.1% for the week.

Despite the extremely oversold internal indicators, the stock market shows no indication of having made a bottom.

Continue reading Today's technical outlook: Are rallies doomed to fail?

Today's technical outlook: Is a bear-market rally in the cards?

Posted Feb 23rd 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

Despite the Dow breaking to new lows, there were a number of positive signs on Friday that could indicate that a bear market rally is just about to get underway.

As pointed out by our friends at Dorsey Wright, the Nasdaq has remained above its November low of 1,295, and the S&P 500 is also just above its November low of 741. And Dorsey said its NYSE Bullish Percent took a big hit on Friday, falling 5.6% to 26.4%. But this is well above the November lows of 8% and they said it is "exactly what we want to see in a re-test with individual stocks holding up better than the indices."

Continue reading Today's technical outlook: Is a bear-market rally in the cards?

Today's technical outlook: Markets at a crossroads

Posted Feb 5th 2009 9:30AM by Sam Collins (RSS feed)

Even though the Dow Industrials closed below 8,000 for the third time in three weeks, the support at 7,940 has held and the other indices, including even the Dow Transportation Index (DOW: DJT), are now up a more comfortable distance from their support.

Most of our internal indicators have turned up but are not overbought, and the sentiment indicators show fear on the part of the public (the American Association of Individual Investors has shown four successive weeks of bears weighing at more than 44%) and optimism on the part of insiders -- a good combination.

And one widely followed exchange-traded fund, the PowerShares QQQ Trust (NASDAQ: QQQQ) which track the Nasdaq 100, closed above both the 20- and 50-day moving averages for the second-consecutive day with relatively strong volume on the buy side. (The QQQQ is also my trade of the day.)

But not everyone agrees with my analysis.

Continue reading Today's technical outlook: Markets at a crossroads

Market correction nearing a bottom

Posted Aug 13th 2007 12:20PM by Eric Buscemi (RSS feed)
Filed under: Economic Data

Two contrarian signs that a market bottom is approaching have raised their heads. The first is the always somber Marc Faber, the famed proprietor of the Gloom, Boom & Doom Report, who said late last week that the current down-drift in stocks is the beginning of a global bear market.

The second is the increasing chatter that the massive U.S. budget and trade deficits are going to come back to haunt the U.S. economy.

Mr. Faber's bearish pronouncements and the general call by economists and other pundits saying this is the time that the trade deficit is going to crush the U.S. economy almost always coincides with a bottom of the US market.

For the most part, virtually every indicator suggests the U.S. market is approaching a bottom. However, a good contrarian indicator, the AAII Index that measures individual investor sentiment, has stayed stubbornly high. Actually, bullish sentiment has been increasing during this market's decline.

Continue reading Market correction nearing a bottom

Near term mixed signals for stock market

Posted Jan 8th 2007 10:23AM by Eric Buscemi (RSS feed)
Filed under: Major Movement, Forecasts, Indices

A few sentiment indicators point to a market that might be in a tight range for the next few weeks.

After an excellent fourth quarter for stocks, investors fear has come back quickly. With a minor drop in the Dow, investors withdrew $838 million from stock funds during the first week of 2007, according to AMG Data. Investors were quick to turn to less risky investments such as money-market funds, which drew $891 million, and taxable bond funds that attracted $1.6 billion.

Conversely, the AAII index has seen investor bullishness jump to 49.1% up from 39% three weeks ago.

Such mixed signals suggests investors can be patient. I'd wait for the AAII index to come down below 40 before I'd put money to work.