Daily Picture

StockCiphering.com Nasdaq Weather Report for Oct13,2004

Another Distribution Day for the Nasdaq. The Nasdaq ended the day down 0.24% on volume that was 18.1% higher than yesterday's level. Today's volume was also 14.7% above average.

Yesterday we were also down a tiny bit on higher volume than the previous day, but the character of today's move and yesterday's move were very different.

Yesterday the Nasdaq gapped down and dropped as much as 1.3% in the first half-hour, but then it staged a turnaround and recovered almost all of its losses.

Today the Nasdaq gapped UP 1.2% first thing in the morning and then gave all of it back and then some.

Yesterday's move was bullish in nature and today's move was bearish in nature.

Kind of hard to tell what the market's overall character is at this point. It's rather psychotic. Welcome to Earnings Season, everyone!

This second Distribution Day in a row changed the weather from "Mostly Sunny" to "Partly Cloudy":

--->

So, what's the forecast for tomorrow? The two Distribution Days have put some chinks in the armor so to speak. Here are the possibilities...

If we go up about 1.5% on lower volume or up any amount on higher volume, then that will put us at "Mostly Cloudy":



If we go down about 1.7% on higher volume, then that will plunge us into "Scattered Showers":



Any other scenario will bring us into "Overcast" territory:

Support/Resistance For Thursday

Nasdaq

Resistance

2050
2025
1996
1980-Very Weak
1970
1960
1935-1942-Weak

Support

1915-1920-VERY STRONG
1903-Very Weak
1892-Very Weak
1877
1862
1836-1841-Medium
1815-1820-Very Weak
1750-1755

QQQ

Resistance

37.15
36.80-Very Weak
36.65
36.15
35.65-Strong

Support

35.30-Weak
35.05-35.10-Medium
34.75
34.45-Medium
34.00-34.05
33.70-33.80-Weak

Your Daily CAN SLIM Update Courtesy of http://GabrielsMoneyPage.com

Daily Morning Update: 14 October 2004

Sellers came back in force on Wednesday and turned an early lead into a distribution day for the major averages. The Dow ran into resistance at its 50-day line and closed near the 10000 mark. The S&P 500 crashed through its 200-day line and moved closer to its own 50-day line. The Nasdaq also fell for the day, but its loss was minor. The Nasdaq continues to have some of the best price and volume action, and has been producing some of the best breakouts during the course of the rally.

Leading stocks showed more signs of trouble on Wednesday. Many recent breakouts have given back a large chunk of their gains, and new breakouts have become rare. Investors may want to think about taking partial profits if the selling intensifies on the major averages. There continues to be an underlying shift towards technology, retail and medical stocks, but that may not fully materialize if the rally falls apart. Cut losses quickly, and do not let a decent gain turn into a loss. Not taking profits is an allowable mistake, but there is no reason to compound the mistake by letting profits turn into an actual loss.

New Breakouts: One new breakout appeared.

10/12/04

StockCiphering.com Nasdaq Weather Report for Oct14,2004

The Nasdaq fell 0.91% today on volume that was 11% lower than yesterday's level.

As forecast, yesterday's "Partly Cloudy" skipped right over "Mostly Cloudy" and went right to "Overcast With A Chance Of Rain":

--->

If we fall ANY amount tomorrow on heavier volume than today, then we'll see some "Scattered Showers":

News Links:
http://news.moneycentral.msn.com/ticker/ar...1014&ID=4028982


http://news.moneycentral.msn.com/ticker/ar...1014&ID=4029080

http://news.moneycentral.msn.com/ticker/ar...1014&ID=4029208

Attached Image

Support/Resistance For Friday

Nasdaq

Resistance

2050
2025
1996
1980-Very Weak
1970
1960
1935-1942-Weak
1915-VERY STRONG

Support

1892-Very Weak
1877
1862
1836-1841-Medium
1815-1820-Very Weak
1750-1755

QQQ

Resistance

37.15
36.80-Very Weak
36.65
36.15
35.60-36.65-Strong

Support

35.30-Weak
35.05-Medium
34.75-Weak
34.45-Medium
34.00-34.05
33.70-33.80-Weak

StockCiphering.com Nasdaq Weather Report for Oct15,2004

The Weather changed dramatically over the week... from "Sunny" on Friday Oct08 all the way down to "Overcast" by Thursday Oct14.

---> ---> --->

Today the Nasdaq managed to advance 0.45% on volume that was slightly higher than yesterday's level, so today was technically an Accumulation Day.

The Weather remains "Overcast With A Chance Of Rain":



The Nasdaq has bounced off the 1900 area on both Thursday and today. Coincidentally, its 50EMA line is right in that location (at 1898.76). We will have to watch to see if that continues to provide support.

If we fall ANY amount on Monday on heavier volume than today, then we'll see some "Scattered Showers":



On the other hand, if we manage to advance a big 1.7% or so on Monday on heavier volume, then the weather will improve to "Mostly Cloudy":



Otherwise, expect us to stay in "Overcast" territory.

Your Daily CAN SLIM Update Courtesy of http://GabrielsMoneyPage.com

Daily Morning Update: 18 October 2004

The major averages rebounded on Friday after three straight days of losses, but the gains were not very large. The Dow continues to sit in the worst position, holding not far above the low from the beginning of the rally. The S&P 500 was able to close near its 50-day line, which is a good way to end the week, but it may still be headed for a larger correction. The Nasdaq was able to hold above the 1900 level for the second day in a row, but it could test its 50-day line in the coming weeks. Hopefully, the earnings season will get the rally back in gear before the rally falls apart.

We continue to see trouble with leading stocks, which is not an encouraging sign. Many recent breakouts are running into trouble even after they made strong initial moves. Investors must be very careful to protect their profits and not take too many chances with new breakouts. It is a good idea to consider taking partial profits if the rally continues to weaken.

Our lists are getting smaller, which may indicate trouble ahead. Hopefully, there is just some sector rotation going on while the market tries to regain it?s footing. This rally will not be ale to survive unless some new breakouts emerge and take leadership positions.

Markets

It seems to me that the value side of the markets (DJIA / S&P 500) pulled down the tech side of the markets (NASD) this week. In the longer term, it seems to me that the dollar is going to slip more and oil will not be going back down for quite a while (we have seen oil's lows this year). Precious metals may provide a temporary haven for longer term holders. These factors set up a defensive environment, and I do not think that the "CANSLIM Metaphors" work well in these circumstances. Therefore, I appreciate Brad's daily posts about the weather. At this time, it makes more sense to me than counting d-days.

Trading

Its a trader's market, but stock picking will be thinner and selective. Although there were many trading opportunities this week - especially on the tech side. Small stocks (if picked selectively) resulted in huge swing power moves of 40% or more (see MRVC and ISON as examples). If you make these plays clearly you do not want to be on the wrong side of the trade, and holding periods are very short (1 to 3 days). In the overall market, I am not watching breakouts as much as I am looking for short term reversals. The reversal swings of fundamentally stronger stocks are much shorter (like a reversal of 30% of the downward move). TOPT is a good example of one of these trades I made this week.

The technicals of a reversal are described pretty well by Alan Farley here (called a dip trip) ...

http://www.hardrightedge.com/tour/dip.htm

I do not always follow the technical aspects of measuring the retracement using fibonacci levels, but often just look for institutional buying early in the move. You can get some of that information here ...

http://thomson.finance.lycos.com/lycos/iwa...ker?ticker=topt

Note that before ISON's big move yesterday, there was heavy institutional buying of ISON on Thursday. I-Watch showed this buying and this provided early clues of a possible move.

I'm glad you find the Weather Report posts useful. It's just a computer model that I developed that seems to generally "work" in determining the market environment; however, in actually composing a commentary, it has forced me to look closer at the markets. For example, the bullish behavior of Tuesday's market (gapping down and making back almost all losses by the end of the day), and the very bearish action of Wednesday (gapping up and closing down for the day).

Even though the Weather Report at the close of Wednesday was still "Partly Cloudy", putting together some "what-if's" for the next day (i.e. a forecast) helped me see that something just didn't "look" right with the markets. Personally, I liquidated everything on Wednesday.

I agree that the environment is not ready for anything CANSLIMmish yet, as you said. It appears that we're due for one more leg down. I don't know how far... it doesn't necessarily have to surpass the August lows, however.

We'll see...

I don't know about everyone else...but I am pretty sick of the P & D schemes on the Net...I'm pretty sure most of you can readily identify them...It is not too difficult.

Anyone know of any that they would like to warn us about?

http://www.amateur-investors.com/Weekend_M...s_Oct_16_04.htm

StockCiphering.com Nasdaq Weather Report for Oct18,2004

The Nasdaq advanced a big 1.31% today; however, the volume was weak... 8% lower than Friday's level and slightly below average to boot.

The Weather remains "Overcast With A Chance Of Rain":



If tomorrow's volume is lower than today's, then we will most likely see some "Scattered Showers":



We need an Accumulation Day in order for the weather to stay out of rainy territory.