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Wow’ed by the DOW!!

Author: Varun Kanotra (info)
Website: http://www.targetsix.com/
Posted: November 16th, 2006 at 8:42 pm EST
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While the DOW keeps making higher highs, which totally wow’s me, the S&P and NASDAQ have started to struggle a bit. Let’s look at all three charts today.

Here’s the DOW:

This is an all-time chart. If you notice the blue lines, they are known as fibonacci fans. You can find those as a common technical study set on java charts. I personally like to use the prophet charts, they are easy to use and flexible (especially the new toolset that was just released). Anyways, if you connect the all-time lows on this chart to the all-time highs (the last all-time high before we started making new highs recently), you will notice that the monthly candle is at/near resistance. Does this mean it will pull-back? I don’t know. It sure looks like its going to do something. We will have to see, and not speculate. If it does, one should not be surprised. If the chart was not clear (even after you zoomed in), here’s another view for ya:

Better now? So you see, if the fib resistance holds, we should see some selling coming soon. There is definitely selling pressure building up on the short term charts. Let’s look at the SPX:

This is a one year chart, see those topping tails in the blue oval? That’s the bears. Shhhhh…yes, they’re coming. Slowly but surely. They might not stick around long but they’re presence is certainly being felt in the air.

Similar on the NASDAQ one year chart:

What’s interesting about the three indexes is that NASDAQ is the only one that’s at an indecision point. The other two have atleast some body on their candles today. Ans since NASDAQ is typically the leader, we will see if that indecision leads to some sell-off tomorrow. Yes, it can certainly come as early as tomorrow.

Also, not to forget we have some housing data coming out. Check out the yahoo economic calendar (http://biz.yahoo.com/c/e.html) for more details.

Now a look at some trades:

OIH: I like this one for a short position (for a short time as well). It formed a beautiful bearish engulfing formation today. Check it out:

It is nicely re-testing support at 135, a break through that should comfortably take the ETF lower. It sure has fallen back into its channel. Keep this trade short term.

XAU: I love the short play here. It’s been working out nicely.

RIMM: What a move in RIMM today. The stock is well rested and wants to push higher. Watch out for some upcoming resistance but I see RIMM as being quite strong.

RMBS: What a beatiful one-day trade today on Rambus. The darn think shot up 30%. HOLY SWEET JESUS!!

Volume was 1800% more today. This is a stock that had an all-time high of $127. Yes, this was a triple digit stock back when it was young and restless. This move should attract more buyers.

HYDL: I had this one on my buy list and it worked out beautifully. Now its ready to be shorted. I mean beat down with a stick, short!

Take a look:

I like it short here for another 2 pts or so. Some consolidation after that (potentially) and then more shorting!! :-) To see exactly what I mean, look at the month of August.

PD: This one finally broke down through its support area around $95 today. I like this as a short play too. Take your pick between PCU or PD, both are equally good.

That’s all for now. I will be traveling for the next two weeks. I will try and keep blogging, as long as there is an internet connection.

Feel free to leave your comments, thoughts, suggestions to make this blog more interactive.

Adios!

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