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Mid Week Analysis
(5/16/07)
There has been an increase in daily volatility since the Federal
Reserve meeting last week as shown by the 30 minute intra day chart of the
S&P 500. However despite the increase in volatility both the Dow and S&P
500 have made new highs.  At
this point it's beginning to sound like a broken record but as long as the Dow
can remain above its 20 Day EMA (green line) then the upward bias from the mid
March low will remain intact. 
Meanwhile
the same thing holds true for the S&P 500 as well with its 20 Day EMA (blue
line) now around the 1494 level. 
As
for the Nasdaq it's been lagging behind the Dow and S&P 500 but managed to
close back above its 20 Day EMA (blue line) on Wednesday. The recent
weakness in the Nasdaq is somewhat suspicious but as long as it can maintain
support at or above its 50 Day EMA (green line) then it will be okay. Of
course if it were to break below its 50 Day EMA at some point then that would be
very concerning. 
Finally
despite the strength in the Dow since mid March its current 2 Period Weekly RSI
reading is now nearing a value of 100. During the past 6 years there
has only been two other occurrences when the Dow's Weekly RSI reading has
reached the 100 level. The first occurrence was in early 2004 (point A)
while the second occurrence was in late 2002 (point B). In both
occurrences the Dow then went through a correction lasting several weeks shortly
thereafter (points C to D). 
Stocks to Watch
(All charts are weekly unless denoted otherwise) Right now most
of the best looking chart patterns are coming from the Oil related stocks.
Several of them are now developing small 2 week Handles after forming a Cup or
Double Bottom pattern. CLB is developing a small 2
week Handle (H). 
ESV is developing
a small 2 week Handle (H). 
GRP is developing
a small 2 week Handle (H). 
NE is developing
a small 2 week Handle (H). 
RIG is developing
a small 2 week Handle (H). 
What I would like
to see is for all of these stocks to work on their Handles for at least 1 more
week before attempting to breakout. Meanwhile
SLB is developing a 4 week Handle (H) with its Pivot Point at $78.30. 
As far as some non
Oil related stocks I'm still watching SAY which is also developing a 4 week
Handle (H) with its Pivot Point at $26.25. 
The Guidance for
our Long Term and Short Term Strategies are shown below for SAY and SLB as
currently they are the only two stocks which have developed a proper Handle.
Remember the proper time to buy either of these stocks is when they reach their
Pivot Points. Also if you decide to take a chance in any of them I would
keep my position size on the small side as well.
Long Term Strategy
| Symbol |
Sector/ |
Chart |
Pivot |
Stop
Loss |
Average |
Initial |
| RS
Strength |
Pattern |
Point |
Daily |
Target |
|
|
(Buy
Price) |
Volume |
Price |
| SAY |
Computer |
3
Month Cup |
$26.25 |
$24.25 |
966,000 |
$32 |
| Services |
with
a |
| 58 |
4
Week Handle |
| SLB |
Oil&Gas |
1
Year Cup |
$78.30 |
$75.30 |
9,100,000 |
$90 |
| Services |
with
a |
| 86 |
4
Week Handle |
Short Term Strategy
| Symbol |
Sector/ |
Chart |
Pivot |
Stop
Loss |
Average |
Initial |
| RS
Strength |
Pattern |
Point |
Daily |
Target |
|
|
(Buy
Price) |
Volume |
Price |
| SAY |
Computer |
3
Month Cup |
$26.25 |
$25.25 |
966,000 |
$27.25 |
| Services |
with
a |
| 58 |
3
Week Handle |
| SLB |
Oil&Gas |
1
Year Cup |
$78.30 |
$77.30 |
9,100,000 |
$79.30 |
| Services |
with
a |
| 86 |
3
Week Handle |
Amateur Investors
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