Weekly Update

By: Angelo Campione | Sun, Nov 16, 2008
Print Email

11/16/2008 4:00:31 PM

Welcome to the Advantage Report, this report summarizes the general market as well as the Nasdaq 100 and issues BUY or SELL signals when the conditions present themselves.

SPX Chart - Bigger Picture

In the bigger picture, we still seem to be in a general sideways pattern, even though we had a new intra-week low. 850 - 1000 remains the broad range, except that we now have some positive divergence happening in the RSI and MACD, which could bode well in the medium term.

A weekly close above the 1000 mark is the point that will confirm an end of the current trading range, which could still take a few weeks. In any event, the current picture is still consistent with a base-forming pattern.

SPX Chart - Smaller Picture

In the shorter term, the market seems hell bent on switching directions just when it looks like one direction is clear. Monday opened well but finished lower, Tuesday closed lower but just held on to the 900 level, Wednesday smashed through closing at around 850 and negated the pattern described last week about the similarities with July. By lunchtime on Thursday it looked like the market was going to crash again when we went below 820, but then in the last few hours of trade, the market added around 10%! Then on Friday it seemed we going to close relatively flat, but in the last hour it came down to finish the day almost 40 points down.

So where does all this chop leave us? Well on the surface, the inability to break higher is negative, however it seems there is another chance for anyone that hasn't yet gone long to do so. We now have a triple bottom (which doesn't happen very often) and we have the potential of a larger bullish wedge developing. Having said this, the potential for a visit to the 02/03 lows of 775 - 800 is also possible before we get the rally we've been looking for and with this week being options expiration, anything is possible.

For next week support on the SPX is 800 - 850 and resistance at 950 - 1000.

The VIX Picture

Interestingly this week, while the market made new lows, the VIX essentially went sideways between 55 and 65. This could mean one of two things, either a level of complacency is returning in the market, where participants feel that things won't get much worse (which isn't great for the market) or there is some underlying strength that will be reflected in prices shortly.

Next week should provide an answer as to which of these scenarios is correct.

NDX Chart - Smaller Picture

The Nasdaq is now in a very similar situation to the SPX in that both are displaying potential bullish wedges.

We'll need to see a break above 1300 to confirm the bullish scenario and at this point, we could still seem some base building happen before we get our break.

General Commentary:

The system has issued a Preliminary SELL signal for both markets.

We seem to be getting close a sell signal but we're not there yet, Thursday's turnaround shows that there's a great capacity for a turn higher in the market, but we'll need to see some renewed enthusiasm to avoid going into a sell.

At the moment, the market is like riding one those wild rodeo horses and it's easy to get shaken off. At this point we're hanging on and we'll see what this week brings as to whether we stay in the rodeo.

As a side note, I mentioned a triple bottom above, bottoms (or tops for that matter) are not known until after the fact and we never know what type we're going to get. We'll often get a W bottom (a double bottom), sometimes we'll get a V bottom and other times we'll get a W + V bottom (WV), known as a triple bottom. We should know soon if we do in fact have this bottom.

Quote of the Week:

The quote this week is from Warren Buffett, "Chains of habit are too light to be felt until they are too heavy to be broken."

Feel free to email me at angelo@stockbarometer.com with any questions or comments.

If you are receiving these alerts on a free trial, you have access to all of our previous articles and recommendations by clicking here. If you do not recall your username and/or password, please email us at customersupport@stockbarometer.com. If you are interested in continuing to receive our service after your free trial, please click here.



Angelo Campione

Author: Angelo Campione

Angelo Campione
"Improved Speculation Through Timing"

About The Advantage Report Trader Alert:

The Advantage Report is a timing service that allows you to maximize profit in both bullish and bearish market, we have a proprietary system that issues buy or sell signals based on several algorithms.

The signals we have are:

BUY - This means go long in your desired investment vehicle.
SELL - This means go short in your desired investment vehicle.
PRELIMINARY BUY or SELL - This means be alert to a potential change of signal and be ready to take action shortly but DO NOT take action yet.
STOP - This means close your positions and go to cash

To Learn more about us: Click Here

Not a subscriber yet? Want to be? Click here and sign up for a no cost trial. Sign up for our TRADE TUTOR weekly newsletter at no cost to get a trading education from Pro Traders.

Important Disclosure:

Futures, Options, Mutual Fund, and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

There is a very high degree of risk involved in trading. Past results are not indictive of future returns. Stock Barometer and all individuals affiliated with Stock Barometer assume no responsibility for your trading or investment results.

Copyright © 2007-2010 Angelo Campione

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com