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(12-2-04)
The indices came close to resistance, and then pulled back.
However, just because they pulled back today, it doesn't mean
they will turn down tomorrow. If indeed they have reached a
short-term top, they may hang around for another 2 trading
days, before they reverse to the downside. Stay focused on
whether the indices can overcome resistance at the
previous support line, that is the litmus test for now!
(11-30-04)The
indices recorded minor losses while managing to stay above
support. We don't have much to add to what we said
yesterday, but we would like to offer you an illustration of
what may lie ahead. The chart pattern of the SP usually resolves
in one of the two scenarios shown in the graphs
directly below. If the "pullback" is already
unfolding, then scenario #2 illustrates how we would
expect price to behave; we would expect a further decline to
1060 and then a bounce. However, if the "pullback" is to unfold
next week, then scenario #1, illustrates how we would
expect price to behave; we would expect a 2-3 day rally
following one more test of support -perhaps tomorrow- that will
carry the indices just marginally above their most recent highs,
but failing to reach the first upside targets. The failure to
reach the first upside targets, will fuel the pullback, as
some investors interpret such failure as a sign that
the rally has run out of fuel, and thus, it's time
to turn some of their paper profits into net
realized gains.
The XAU broke below its
50 hour MA, and the odds favor a test of channel support
at 104.50. If support does hold originally, be
aware of the possibility that
it may rally back up to 107-107.5, and then turn down
and take out support on the second try.
In that case the downside target will be either
the 38.8% Fib. re-tracement level at 99.90, or,
the 50% Fib. re-tracement level, at 96.5.
This is not a prediction, but an outcome that quite
often the current chart pattern resolves into.
Notice that even if such
sell-off took place, if the 96.5 level contains the
decline, it would mean that the rising channel
which defines the intermediate term trend will
remain intact.
(11-23-04)
The indices continued to consolidate between support and
resistance, looking at breadth alone one would expect a
break-out, on the other hand, looking at volume alone, one
would expect a break-down due to the lack of it, however,
we can't make much out of low volume because in a holiday
shortened week, volume tends to dry up!. It could
very well be, that for the next two trading days, price action
will remain mute, and the "break" will take place
next week. We have nothing else to add, other than,
wish people here in the U.S. Happy Thanksgiving, and
thank everyone from everywhere around the world, for
being our client.
(11-22-04)
We have a very interesting set-up.
Both
the BSEs and the T.O.s rolled over, while
price has continued to rise, that means the current leg of
the rally is the last one, and once it is over we should
expect a pullback between 3.5% and 5%, and perhaps even bigger.
Therefore, at this point there are two possibilities,:
a)
Either the "last leg" is not over yet, or,
b)
Friday's reversal did mark the end, and today's price action was
nothing but a "dead-cat" bounce.
If
the indices can't get above last week's highs within the next
two trading days, then in all likelihood today's will turn out
to be a dead cat bounce, if last week's highs are exceeded on a
closing basis, then we got to continue to give the
benefit of the doubt to the bullish case.
On
another note, we suggest caution on gold stocks.
(11-18-04)
Today was an "inside day" which is usually bearish,
but unless price does turn down, it doesn't mean anything.
Yesterday's lows/highs remain the key for the
market's short-term direction. Therefore, yesterday's two
observations, still apply for tomorrow.
On
another note, we suggest caution on gold stocks.
(11-17-04)
The indices gapped up at the opening and rallied strongly, but
in the end their gains were halved, ostensibly, due to rising
oil prices. There are two observations to make from
today's action:
a)
The McClellan Oscillators are at a lower level today, than
they were 3 days ago, but price is higher today -for the NYSE,
and NASDAQ- than it was 3 days ago, that means we got a negative
divergence. Divergences do NOT mean a thing, unless price
follows, however, they are a warning sign for a potential change
in trend, thus, as of today we have an official warning sign of
a potential change in the short-term trend within the next 1-3
trading days.
b)
If tomorrow the indices trade above today's highs on positive
breadth, the odds will favor further advance to the top of the
rising channel by Friday, or, Monday. If early on tomorrow the
indices trade below today's lows on negative breadth, the odds
will favor a break below channel support by the end of the day.
(11-16-04)
Today's decline did not anything to disturb the up-trend either
in NASDAQ, or, in the SP, thus, by definition even for the very
short-term we got to remain bullish. If the indices were to
violate their up-trends tomorrow, that will be a different
story. If they did so, the next question would be how far the
decline would go? In our view the answer lies in sentiment, if
people get all happy and bullish about it, it could be
more than 5%. However, if people get all "beared
up" and the system get clogged with shorts, then it
is doubtful that any decline will exceed 3%-3.5%.
(11-11-04)
The key thing now, is for the SP to close above 1185 by
tomorrow, or, Monday. If it does, the odds will be
better than even for a continuation above 1200. If the SP
fails, turns down and closes below 1160, we'll get at
least a 3.5% decline.
(11-10-04)Most major indices continued to consolidate while
holding above the lows of the previous three days. If the lows
continue to hold for another 1-2 days, and the
SP closes above 1185 by Friday/Monday, the
odds for a rally up to
the 1210-1220 zone, will be better than even. Pay
attention to the lows of the last three days, all is well above
them.
(11-9-04)
The indices held tight thru out the day, giving us
no reason to change the opinion we stated yesterday. In
fact, today's price action re-enforced
our belief either the indices will consolidate
at current levels for most of the week, and will break-out
to the upside by Friday, or, next Monday, or, they will
start by Wednesday a pullback that will probably exceed 3.5%. We
ought o know by tomorrow what it's in the cards for the
next several days.
(11-8-04) Today's action didn't give us anything to say,
that we hadn't already mentioned in yesterday's weekly
report. In our view, either the indices will consolidate
at current levels for most of the week, and will break-out
to the upside by Friday, or, next Monday, or, they will
start by Wednesday a pullback that will probably exceed 3.5% .
Please follow the parameters we gave you yesterday, to
help you recognize which scenario is unfolding, so
you can trade it appropriately.
(11-4-04)
In yesterday's comment for the Quantifier we also
mentioned that the "dramatic move" wasn't over yet.
After today's action, we believe that is now nearly complete.
The indices are a few points below their respective
resistance (notice that yesterday's first upside targets have
now become immediate resistance levels) and we expect them
to make contact with it.
(11-3-04)
The markets acted quite positively, but they do
appear overbought. Our opinion is that that we will see a
pullback between today's closing levels and the first upside
targets listed below. However we also believe -based upon the
evidence that we have so far- that the pullback ought to be
temporary in nature, and it will be followed by another push to
upside. The only thing that argues for a larger top approaching
in the near term, is the assets in the RYDEX bear funds, as of
yesterday's close they were just $200m above the level that
marked every market top in 2004, which was followed by several
weeks of declining prices. In summary, the odds do
support a short-term pullback between current levels
and 1% to 2% higher.
(11-2-04)
As we had expected, today was a day of minor gains for
the major indices, with the exception of the Dow.
The indices rallied early, and reversed at their respective
resistance points, supposedly because investors got spooked from
exit polls indicating a possible Kerry win. We do not know if
that was the real reason for the late pull-back, what we do know
is that the reversal came after the indices made contact
with resistance, which is not all that unusual. Whether
today's reversal sticks, or, it gets reversed tomorrow, it's
anybody's guess and making any prediction is an exercise in
futility. We hope that we have a clean and un-contested outcome,
and we'll re-evaluate tomorrow.
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AEGEAN CAPITAL
GROUP INC.