Weekly Update

By: Angelo Campione | Sun, Dec 14, 2008
Print Email

12/14/2008 6:32:19 AM

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.

Bigger Picture

In the bigger picture, we touched the top of the downtrend channel last week and finished the week with an indecisive candle. The momentum is still positive at this point but we seem to be in a period where the potential for another dip lower is possible.

We've been looking for a sustained rally for a while now, but at this point we're still forming a bottom. Watch for a cross of the MACD and a close above 900 for confirmation of a medium term rally.

Smaller Picture

In the shorter term, we raced away on Monday with a break above 900, making it seem as though we were going to break the 50 DMA, however the rise wasn't sustainable and we fell back below 900 the next day. The rest of the week was essentially back filling, although Friday's finish was encouraging.

Having said that, we now have a symmetrical triangle pattern on the above chart and this represent indecision. Generally what happens in these situations is that if we close below the uptrend line, then it's bearish and if we close above the downtrend line, it's bullish.

With some big news items expected this coming week, no doubt this pattern will be resolved. At this point it's unclear which direction will win.

For the week ahead, support on the SPX remains around 850 and resistance around 900.

The VIX Picture

The VIX is confirming the indecision of the main market by also being in a symmetrical triangle pattern. A break above 60 will be negative for the market in the short term, while a break below around 53, will likely have the market rally. If the 53 level breaks, the 45 level is likely to get tested.

Looking further out, we still need a close below 45 to confirm that stability is returning to the market and while the current climate continues, that's unlikely.

The VIX measures the premiums investors are willing to pay for option contracts and is essentially a measure of fear i.e. the higher the VIX, the higher the fear in the market place.

NDX Chart - Shorter Picture

While the Nasdaq closed above 1200 for the week, it's still at a resistance point as the overhead downtrend line shows. Overall, the Nasdaq is in a symmetrical triangle pattern like the S&P and so the picture going forward is unclear.

A break higher from here should see us head for the 1300 level, while a break lower is likely to go back to 1100 at least.

For next week, initial support on the NDX is around 1160 and resistance is around 1240.

General Commentary:

Both the SPX and NDX remain on a full BUY signal.

While our systems remains on buy signals, there is evidence of the internal indicators getting into over bought territory. Having said that, the short-term momentum is still up and we could simply consolidate a little more before continuing higher, but it's a tender time.

The week ahead is options expiration and when we combine the big news items expected with this, we could get quite a wild week. In addition, with the market in an indecisive stance, we could get an even bigger movement as the majority pile into the side that breaks.

We could be in for a very interesting week!

Quote of the Week:

The quote this week is from Pearl S. Buck (a Pulitzer-winning American writer), "The young do not know enough to be prudent, and therefore they attempt the impossible - and achieve it, generation after generation."

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