Trader Mike

The market had a very strong day on Friday which put the indices close to important resistance levels. The S&P 500 is right at the top of its almost year-long downtrend channel while the Dow and Nasdaq are approaching their 200-day moving averages. Right now the Nasdaq futures are indicating an open right on the 200 DMA (damn those technical traders!), so I’d be real careful about trying to initiate longs here. Here are charts of the Naz and and S&P:

I love how the market sets itself up for these ‘big bad events’. You can just see the anticipation, and now hesitation, over tomorrow’s jobs report. The NASDAQ has rallied from deeply oversold territory right smack into several levels/types of resistance. It’s now perched just below the top of its downtrend channel, just under 2000, and the downward sloping 50-day moving average looms just a bit higher. Add to that yesterday’s hanging man as well as what looks to me like a deliberation pattern and overbought stochastic. All of that tells me that the NASDAQ is a screaming short under yesterday’s low. Of course the report tomorrow …

Not to sound like a broken record, but it got even uglier today. We had distribution days across the major indices, the Dow completed a head & shoulders top and is now negative for 2004, the S&P 500 gave up its 50-day moving average and the NASDAQ closed below the bottom of its trend channel. Now that things are clearly bad it’s probably time for a bounce. I’d like to see an early morning flush out of the bulls followed by a 2:30 rally back into positive territory. So I’m looking for a lot of hammers to be made tomorrow or Thursday.

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Uglyyyyyyyyyy - in here!
Huh, in here! Huh, in here!
It’s gon’ get uglyyyyyyyyyy - in here!
Huh, in here! Huh, in here!

Bubba Sparxxx - ‘Ugly’

Higher volume selling kicked in today creating yet another distribution day on the major indices. I’ve heard some technicians hoping that the broader market would drag the NASDAQ higher, but I think the opposite is going to happen. The NASDAQ is once again headed for the bottom of its trend channel. I expect a bounce in that area, which I think is around 1975 right now. The Naz is looking really sick these days. For the first time since March 2003 my Multiple Moving Averages are looking bearish. …

The NASDAQ continues to act poorly. Today it sold off on higher volume after tagging the Jan - Feb downtrend line I drew yesterday. (The S&P and Dow also had distribution days today.) It’s now back below its 50-day moving average. I think it’s safe to assume that we’re heading back down to the bottom of that trend channel. We may just drift back down towards that line over the next two days while thhe angst over Friday’s jobs report builds.

Today was another one of those days where we got better than expected economic news which caused stocks to sell off and bond yields to rise. Although we’re still range-bound, there was some interesting action today.

The Dow is still at the upper end of its range and is in overbought territory based on my stochastic indicator. The S&P 500 and NASDAQ charts look a little different though. The S&P has also reached overbought levels but it has only risen to the middle of its range. It also dropped back beneath its 50-day moving average, and looks like it’s in a downward …