Watchlist Saturday

Market Posture:

Dow: IT (intermediate term) Bullish and ST (short term) Neutral to Bullish. The Dow is still Wedging its way up towards the top end of the long term channel, but the Wedging price action is somewhat troublesome. Short term resistance is in the 11,875 area, but there are little trouble spots between 11,750 and 11, 785. If the Dow can carry through with a full swing, then resistance is between 11,950 - 12,000. A drop below 11,400 could mean a bearish breakdown of the IT uptrend/Wedge.

Here is a chart of the Dow:
(click on image to enlarge)

SPX: IT Bullish and ST Neutral to Bullish. The SPX is doing the same thing as the Dow. The only difference is the numbers. Short term resistance is in the 1,313 area, but there is a little trouble spot at 1,305. If the SPX can carry through with a full swing, then resistance is in the 1,320 area. A drop below 1,270 could mean a bearish breakdown of the IT uptrend/Wedge.

Here is a chart of the SPX:
(click on image to enlarge)

I want you to notice what the SPX did the first four times it bounced off the IT uptrend line of the Wedging price action. Now look at what it did Thursday. Notice the difference? That's one more reason I'm a little cautious right now. I'm bullish, and playing calls, but I'm watching very, very closely early next week.
(click on image to enlarge)

Naz: IT Bullish and ST Neutral to Bullish. The Naz is much stronger than the Dow or SPX, and is solidly IT Bullish. The RUT and the SML (Small Caps) are very similar to the Naz. This is exactly where you would expect Speculators to get frenetic and steamy during the early stages of a "potential" market recovery. The quick drop in oil prices coincided with the sharp move up in Tech and Small Caps. However, Smart Money has been reluctant to buy in a broader spectrum of sectors, so the current bullishness in the market is not across the board with really wide breadth. Nevertheless, I have been playing calls for the most part the past several weeks until the charts show me something else. The Naz is battling with the long term downtrend line, and is about as far above the 200dma as it was in May and June when it rolled over. At the very least, I am expecting a short term consolidation in this are. However, if oil takes a fast dive down to $100 without any short term wiggle this week, then the Naz could go parabolic right up to 2,550. As it is, there is short term, intermediate term, and long term resistance right in the current 2,450 area. Very short term support is at the 200dma and the mid point of the long candle on Thursday (2,430), with the next support down in the 2,400 area.

Here is an intermediate to long term view of the Naz:
(click on image to enlarge)

I am still good with the Bullish Watchlist from last Thursday, and I'm not going to update it yet. If the market rolls over on Monday or Tuesday, then I will update it. The only thing I will note is that many of the stocks are just about done with their upswings. I'm also interested in a couple of Commodity stocks like MON and AKS, and some Energy stocks like DVN and CVX. If Energy and Commodities catch a little short term bid, then I expect the rest of my bullish watchlist to consolidate for at least a few days.

The Economic calendar won't do much until Tuesday, and even then PPI is not as big a deal as CPI, which already came in with inflationary numbers that traders blew off because they're looking forward towards lower inflation from the recent drop in oil prices. Earnings also doesn't give up much until Tuesday when we get HD and TGT before the open and HPQ after the close. Monday will probably be technically driven unless we get a news bogey or a big price move up or down in oil. As always, keep one eye on the oil charts when you're trading stocks this week.

Note: I've caught up on answers to the comment questions for Thursday and Friday.

Another Note: I'm caught up on the most recent round of email requests for my Continuation Pattern Search and my Index Watchlist. If you haven't received them yet, and you requested them from me, then you may need to give me another email address. If you don't know what the Referral Program is click on this link: referral program

About the Continuation Pattern Search: The directions include a 10dma but the screenshot doesn't show the 10dma. I will actually run both sometimes. If you want a little tighter, shorter consolidation then keep the 10dma in there. If you want a little wider, longer basing pattern then just use the 21dma and the 30dma. I used the latter most recently (just like the screenshot). But you can use both and check out the slight differences in the results. You can see that this is an easy search to play little variations on when you're looking for slightly different patterns. You really have a lot of versatility with the criteria. I like both combos, but I probably use the 21/30 more than the 10/21/30.