Welcome to
"StockBreakthroughs Newsletter"
March 3, 2008.
Market Recap
Last week had news for all walks of life. There was news that showed the economy is slowing, including falling home prices, dropping consumer spending and slumping consumer confidence. There was corporate news, like the $11 billion charge at insurer American International Group, the drop in profit at Dell and the capital injection vote at Swiss banking giant UBS. There was news about commodities: Did anyone miss the price of a barrel of oil topping $103?
Oil has reached new record highs last week with a record close of $102.59 last Thursday.
And then, there was the stock market. After looking like it was on track to post weekly gains, the market's mood reversed on Tuesday and it racked up three days of weak performance, culminating in substantial losses on Friday, which took U.S. stocks well into losing territory for the week and the month.
The Dow Jones Industrial Average ended Friday with a drop of 315.79 points, or 2.5%, finishing at 12,266.39. It's loss for February was 3%. The broader Standard & Poor's 500 Index lost 37.05 points, or 2.7%, to close at 1,330.63 on the day and mark a monthly loss of 3.5%. The technology heavy Nasdaq Composite lost 60.09 points, or 2.6%, on Friday to close at 2,271.48, a 5% loss for the month. The Nasdaq has dropped 14.4% so far this year and is the worst performing of the big three indices.
From a technical point of view, the following can be said:
The Dow Jones has been in a channel for the past 6 weeks with up and down swings of up to 600 points. Notice that the orange 30-day moving average line (SMA-30) on the DOW is flat and the blue SMA-7 line has started to move sideways.
Source: www.bigcharts.com
The S&P 500 chart dropped on Friday to such an extent that the price was shortly way below the support line of 1330 points. The SMA-30 here is down-trending and notice the similarity in patterns. Just like the Dow, the SPX is also in a channel.
Source: www.bigcharts.com
The Nasdaq also dropped below support on Friday. It along with the S&P made a short trade confirmations on Friday. The Nasdaq is in a descending channel with SMA-30 and SMA-7 both being down.
Source: www.bigcharts.com
So, each time the broad market has staged a rally in the past couple months it is stalemated by bad news and/or forecasts. Being that is what we have, that is what we must work with if we care to stay active in short-term trading. Overall then, the Big Three charts are bearish with the DOW attempting to be neutral. Take individual charts on their own merits with the understanding that the broad market may or may not back up an individual directional trading decision.
So if uncertain, then either stay indoors or be prepared for things to become a bit turbulent.
Yours in Successful Trading,
Information, charts or examples contained in this lesson are for illustrational and educational purposes only. They should not be considered as advice or a recommendation to buy or sell any security or financial instrument. We do not and cannot offer investment advice. For further information please read our disclaimer at: