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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

Today's technical outlook: Dow theory put to the test

Posted Feb 4th 2009 9:30AM by Sam Collins (RSS feed)

I'd like to make a comment on the "Dow Theory" today: Since there were several write-ups circulating Tuesday about a new "bear-market signal" given by the theory on Monday, it is worth addressing.

Some analysts were all atwitter, saying that Monday's close on the Dow Jones Industrial Average and the Dow Transports broke under the January lows. Thus, they said, a new Dow sell signal was triggered.

The theory states that if a double confirmation occurs, (i.e., that if two of the three Dow averages make a new high or low) then a trend is confirmed.

Well, the Transportation Average did fall below both its January and November intra-day low and closing low. (I mention January only because one report said that it is relevant -- but it actually has no significance at all.) And the Industrial Average did break the closing low of January -- but that is irrelevant, since the market's lows were made in November.

Continue reading Today's technical outlook: Dow theory put to the test