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Registered User
Joined: 11/13/2004
Posts: 141
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I may be reading to much into this, but I thought I would post this for discussion
Below are long term (weekly)charts for the S&P500 and the NASDAQ
Notice how these two averages have formed a three wave pattern along a long term trend line.
The first wave is the biggest, then a smaller second wave and a yet smaller third wave.
Also note that as each wave made a higher high MACD made a lower high, then note the volume on the current test of the trend line and think about how fear seems to be seeping into the market
I am looking at this in contrast to hearing about low market valuations on CNBC earlier today and how strong the economy is expected to remain, Then I think about earnings season starts this coming week and how weak the month of October is on a seasonal/annual basis
Any thoughts
UserTM
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Registered User
Joined: 10/7/2004
Posts: 2,126
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Usertm, you are looking at a weekly chart. You well know that by doing that you always get late to the party. Use a daily, and the picture changes completely. If you want to be the first to the party use Daily - what the hell use intraday. It takes a while to show in weekly and well you already aware of the market action this week - why wait for a weekly confirmation, by then it may be down to the july lows. I agree with you about October. About CNBC ??? who cares. About earning season - well Katrina will not show all the way this earning season, but the next one. I would still be aware of companies' forcasts which I expect to be in the downside. I certain this drop is no over yet, although the market has to gasp for some air before the next dive.
good luck.
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Registered User
Joined: 4/6/2005
Posts: 239
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If you follow Elliot Wave theory the peak in 2000 was most likely wave 5 of a Grand Supercycle, which will be followed by a three wave corrective pattern. Wave A of the corrective pattern bottomed in late 2002, we've just hit the peak of wave B and are probably about to take a big ride down on wave C. If you aren't familiar with Ellitot Wave theory read some of Robert Prechter's books.
If we are entering Wave C, look for a bottom at about 500 for the S&P, possibly a bit lower.
It would be a good time to perfect your short game.
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 Gold Customer
Joined: 3/10/2005
Posts: 12
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Good discussion topic. I look at those indexes (and others) to figure out what the overall market is doing before making any decisions down at the individual stock level.
For many years, my primary index of choice is the Value Line arithmetic average due to it's non-cap functionality. It's currently hovering at a significant level from a fibonacci perspective.
Hope the moderator doesn't kill this link..not from any website, just an aol area where I can share some of my personal charts...
(removed by Moderator)
(sorry, all links must be removed)
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Registered User
Joined: 11/16/2004
Posts: 105
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When I look at the broader market indexies, I revert back to looking at the weight of just price & volume as being the most reliable indicators rather than moving averages.
What is most apparent to me is the increasing volume of the last quarters leg down. To me this spells that the tug of war between inflationary & interest rate fears have the bears moving the broad averages. If this indicates a major shift in the business cycle than more can be learned by adjusting criterias of more distinct indicators like MACD, BOP & Stochastics applied to individual sectors & Industries. Allthough in this case these indicators are behaving exactly as volume divergences are telling us.
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