The Dow closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low. This level coincides with the 25 day moving average.
This is a support level and we shall see how the Dow goes on Monday. From the USO chart it looks like oil might have topped out on Friday. How will stocks move if oil prices retreat on Monday given that the latest focus and “reason” for the fall in the Dow last week was due to high oil prices?
It is still possible that this drop might be more of a correction than the continuation of a bear trend. One good point supporting this is that the falls in the markets recently have been due to rising oil prices rather than credit crunch and recession fears. This is not exactly new type of bad news and I think that the oil price rise will be dealt with very soon. The USD$ has strengthen quite a bit, hence that is no longer a reason for higher oil prices. Supplies have been hit by events around the world but I get the feeling speculators and traders have been the ones driving oil prices up.
No shorting for me just yet.
S&P 500
The S&P 500 similarly closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low.
I would like to see more confirmatory signals before calling for shorts at this point in time.
It feels like this might be a correction of the recent rally rather than the continuation of a bear trend.
However all this would change come Monday.
NASDAQ Composite Index The NASDAQ has been a lot stronger than the Dow and the broader S&P 500. Are investors taking some money off the table from energy and agricultural counters and putting them in technology stocks?
If broad markets were to fall, it looks like technology counters would be the ones with a lot more meat to short.
Straits Times Index The STI closed on the 25 day moving average. There is however bearish divergence between the index and RSI peaks. Confirmation would be a close below the Friday lows. Support tipped at 50 day moving average and 3000 level (necktie of 25 and 50 MA).
However we must wait for confirmation on both the STI as well as the Dow before shorting. It could very well also be the STI taking a breather before making an attempt to test the 200 day moving average for the first time since the start of the decline since Oct 2007.
Hang Seng Index The HIS closed on the 25 day moving average similar to the STI. The key psychological level however is the 25000 level. And the HIS managed to eke out a close above it still.
25 and 200 MA are very close together. A rise in markets on Monday (due to a fall in oil?) would have them crossover forming a key area of support/resistance at 25000. Hence not only as a round number psychological level, but also a technical one.
In the event of a fall 23400 would be a support level.
Shanghai Stock Exchange The SSE has been trading in a range with the 50 MA as the resistance. We will have to watch how the SSE performs over the next week.
Nikkei 225 The Nikkei closed below the upward trendline. Support tipped at the 25 day moving average.
No comments:
Post a Comment