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[Previous entry: "ALKS Exit for -.56, 4.8%"] [Main Index] [Next entry: "Fibmaster's Daily Update"]

10/05/2004 Archived Entry: "Fibmaster's Daily Update"

The markets are all above key resistance levels now, a bullish condition. Even though the daily charts look bullish, the long-term charts (weekly) are still bearish and overbought. So there is still a good chance of a return to the downward channel on the weekly charts. It is too early to call a top, but keep the short side in mind if you see weakness at Fib levels. Here is a quote directly from my intra-day chat room: " Weekly chart is not out of bearish zone. Daily is bullish. Intra-day below 30 minutes is bearish, but 30 min is setting up for potential support. Maybe that's too confusing? Pick your time-frame."

QQQ
Sept 21 -QQQ is testing resistance at $35.77/$36.00 SK on the daily chart.
Sep 24 - The SK resistance of $35.77/$36.00 held, causing a significant and quick retracement. Now we have to watch for support at $34.50. There is an SK level there on the daily chart, which should bring some buyers into the market. Scalpers may consider covering shorts there on signs of support. After that, a bounce could provide great short trades, let's see if we get one.
Sept 29 - QQQ is supporting at that $34.50 SK level right now. I would not be surprised to see a counter-trend rally here, up to a FibLevel resistance. Key resistance levels on the way up are at $34.59, $34.85, and $35.25.. The $34.85 level is the stronger of those three. Intra-day bullish scalpers should consider taking profits at those levels. Bears may consider entering at those levels.
Update Oct 5 - QQQ resisted at the $35.25 for a while, regained some energy and punched through to new highs. The recent high was $36.60 and QQQ is in an intra-day retracement towards support right now. There is support at $36.20 today, if that breaks the chart turns bearish in the short-term.

SPY
Sept 21 - SPY has SK resistance at $113.00/$113.25 and also the top of a downward sloping weekly channel in that area. Yesterday the S&P looked weaker then QQQ and actually dropped from that resistance level. We may see a rally in this chart intra-day, until the markets determine whether this resistance will hold. Consider scalping shorts on intra-day resistance.
Sept 24 - After stalling a the resistance level $113.25 (slightly above), Spy has now retraced to a support level. The daily chart has SK support at $111.00, so we can expect some support there. If it crashes though here, the markets will become extremely bearish! Scalpers may consider covering shorts intra-day near $111.00, and taking risky counter-trend longs intra-day. A bounce to Fib resistance could provide good short trades. I prefer short to long trades in this market, sell rallies.
Sept 29 - $111 support still holds, and we may see a counter-trend rally from here. Key resistance levels for SPY on a rally are at $111.25, $111.75, and $112.50. The $111.75 is the stronger of those three, lets see how it plays out.
Update Oct 5 - The S&P also rallied beyond the resistance trend-line, and needs to show continued buying or it will drop back to the down-sloping channel. On the 60-minute chart, there is support at about $113.00, so that needs to break for the bulls to start capitulating on the daily chart.

DIA
Sept 21 - DIA has a resistance area similar to SPY, up at $103/$104, and has backed off of that level. If QQQ can get in line, the markets will top out and retrace downwards. Look to short rallies intra-day for scalp trades, but wait for resistance to manifest.
Sept 24 - Wow what a drop. The predicted $103/$104 resistance drove DIA down to $103.40 so far. There is an L6 support level at $100.30, though it is not as strong as an SK level. DIA may support her, especially if QQQ and SPY support at current levels. This chart screams "short the next rally" to me.
Sept 29 - DIA has been weaker than the NASDAQ and S&P, retracing all the way down to L6 support at $100.31. The daily chart looks like it can support here for a bounce. Key resistance levels are $101.25 and $102.25.
Update Oct 5 - The Dow is the weaker of the indices right now. It didn't even rally above the resistance trend-line as the other indices did. It would take a sustained move above 103.50 for this chart to turn bullish. There is short term intra-day support near $102.00, there would be great shorting if that breaks. Or scalp long on support there.

S&P (E-Mini)
Sept 21 - The E-Mini has a huge down-sloping channel on the weekly chart, since the high of 1163.75 in March 2004. There is a significant resistance area near the top of that channel at 1124/1125. The E-mini is currently a little above that area, we must watch to see if it returns. There is still a good chance of a roll-over here.
Sept 24 - The S&P obediently rolled over at the predicted level, near the top of the weekly channel. No I can't claim that I caused it, but I certainly warned of that probability. Now the question is "how far down can the markets go?". Over the long term, the bottom of the channel is around 1046.. That may sound scary, but it isn't really. Before then there will be many opportunities to buy and sell, especially intra-day. There is support on the daily chart at 1104/1105, so I would not be surprised to see a short-term rally from there.
Sept 29 - The 1104/1105 support has held, and the S&P may have a rally from there. Key resistance levels for the S&P are 1109.25, 1113/1115, and 1120.50. The middle on, 1113/1115 is the stronger of the three. Scalpers should consider exiting at those levels and bear scalpers may consider shorting there.
Update Oct 5 - This chart also rallied above resistance. Technically we want to buy dips, unless the NASDAQ and S&P fall back below the down trend-line.

Neal Hughes, FibMaster at http://www.FibMarkets.com, is a widely respected expert on Fibonacci Analysis. Neal has been in the markets for over 20 years, and has distilled what he has learned into a complete trading methodology that maximizes gains and controls risk which he publishes in his newsletter, ProfitPoint. He is also the author of several universally acclaimed Video Seminars on his website. For those new to Fibonacci analysis, Neal provides FREE Fibonacci lessons, available here: http://www.fibmarkets.com/cgi-local/aefs/signup.cgi
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