Tuesday, August 26, 2008

Short term uptrend under attack

Hi there, and welcome back to RI's S&P 500 blog.



As Labor Day approaches, the summer doldrums are almost over for another year. Junior stocks are usually hit the hardest during this seasonally weak time of year - and this year has been no exception. With regard to the broader market, as the diagram above suggests, we are still very well contained within a massive downward pointing channel that has been in place for the past nine months. Using the moving averages above, we can clearly see the SPY entered its bear phase last November (when the 13 week EMA crossed below the 30 week SMA). For simplicity, we will not get an outright 'buy' signal until the 13 week EMA crosses back above the 30 week SMA. As well, normal consolidations take 18 months to play out so I am not expecting too much out of the US stock market (and most world equity markets for that matter) for the next six months at the least.

Currently we are consolidating a 'dead-cat-bounce'. From the extreme lows seen in July, we have rallied back to the 50% level ($131.80) and have not done much since. Should the short term upward pointing channel (small blue lines) be broken, one ought to expect a test of the lows seen in July (A.). Should we consolidate and break higher, resistance should come in at the major downtrend line (B.).

That's all for this week,

Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

Tuesday, August 19, 2008

A key point in the recent rally

Hi there, and welcome back to RI's S&P 500 blog.



This is an important point in the life of the recent rally seen in the stock market. As the chart above details, we have made the 'technical' bounce off the extreme low seen in July (that was the easy part). For this bottom to be real, we will now have to see if the recent lows can hold during a serious retest. At best we may establish a nice consolidation for the next few weeks in an around these levels. My hunch though (considering the rhetoric coming out of Moscow and the poor economic data from across the world) is we will retest the lows seen in July. On a final note, one ought to respect the fact that we are still very comfortably within a long term downward pointing channel. Where resistance to that trend is represented by the blue arrow in the chart above and support is represented by the red arrow.
Better get out that old Beta copy of Wolverines.......The Russians are coming, the Russians are coming!
That's all for this week,

Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

Tuesday, August 12, 2008

Daily bottom comes in at bottom of weekly channel

Hi there, and welcome back to RI's S&P 500 blog.



The long awaited Beijing Olympics have begun. The trends we have talked about over the past four to six years in many commodities look to be changing as the 'build-out' of the Chinese economy has hit its zenith. The Chinesse consider 08/08/2008 to be a very signficant date and I am starting to believe it too! Could this be the pivot point for the commodity markets? From a short term perspective, not less than 13 new commodity trends establish themselves this past week (please refer to WCTS posted at http://www.the-rational-investor.ocm/WCTS080808.pdf).

One result, the S&P 500 index looks to have bottomed amid the commodity market meltdown. On cautionary note - commodity prices themselves are very volatile. After these markets settle down, one ought to expect some sort of test of the old highs. As well, most bottoms require a retest of the initial low. Looking at the chart above one can see how the SPY rallied sharply from its recent lows at $120. When the commodities retest their recent highs I will be expecting a test of the $120.02 area again on the SPY - but hey lets enjoy the rally while it lasts.
We have hit the short term 50% level and are flirting with the fast moving average at $130, should we consolidate and then break higher, one ought to expect a test of the medium term bear market trend channel at or near $140.00....

Enjoy the bounce while it lasts. That's all for this week,

Brian Beamish FCSI
the_rational_investor@yahoo.com
the-rational-investor.com

Tuesday, August 5, 2008

Establishing A Trading Range

Hi there, and welcome back to RI's S&P 500 blog.



The well established bearish channel that began at the end of 2007 continues. Currently we sit very close to the bottom of that channel and the bearish sentiment in the street is quite high. Should either $129.15 or $120.02 be broken one should act accordingly. From a strictly technical/Short term oriented basis, the 200 day on the SPY is currently just above $136 suggesting there could be an 8% rally just to get us back to resistance. Consider too our US Presidential election year thesis (read Opportunity Is Now Here, a special report by The Rational Investor), one ought to see at least a consolidation in prices if not an outright rally over the coming weeks and months. One often is greeted with a sense of euphoria come inauguration day (early January 2009) and by that time one ought to look for a higher market. Ironically, that will probably be the time we will be looking for a top. So to take profits when others are euphoric one must have the guts to be buyers when others a pessimistic. As suggested, the market is quite pessimistic right now. We DO NOT have a buy signal yet! But one must be prepared for such an event. Be patient and vigilant.

That is all for this week,

Brian Beamish FCSI
the_rational_investor@yahoo.com
http://www.the-rational-investor.com