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Mid Week Analysis
(6/6/07)
As mentioned over the weekend I thought the market might
pullback some this week as it was rather overbought. For the first
time in several weeks the Dow has tested its 20 Day EMA (blue line) near the
13470 level. The key thing to watch over the next day or two is
whether the Dow can hold support near its 20 Day EMA. If the Dow is unable to hold support near its 20 Day EMA then that could lead to a more
substantial drop back to its 50 Day EMA (green line) which is nearing the 13200
level.
As
for the Nasdaq the key support level to watch in the near term is at its 20 Day
EMA (blue line) near 2571. If the Nasdaq is unable to hold support at its
20 Day EMA then its next level of support would be at its 50 Day EMA (green
line) near 2540.
The S&P 500 just like the Dow has dropped back to its 20 Day
EMA (blue line) near 1517 and it will be important for it to hold support near
this level over the next few days. If the S&P 500 were unable to hold
support near its 20 Day EMA then its next level of support would be at its 50
Day EMA (green line) near 1492.
Finally
one thing that needs to be watched is the yield on the 10 Year Treasury Note ($TNX).
Notice it has recently rallied back to near the 5% level (point A). The
last time the yield on the 10 Year Note rose above the 5% level (points B to C)
this was followed by multi week correction in the Dow just over a year ago
(points D to E). Thus keep a close watch on the yield in the 10 Year Note
in the days ahead. If the yield were to rise above the 5% level this could
lead to a more substantial correction in the market much like we saw in
2006.
Stocks to Watch
(All charts are weekly unless denoted otherwise) A few stocks are
still exhibiting a favorable chart pattern. GILD is developing a 7 week
Flat Base (FB) with its Pivot Point at $84.50. 
PRXL is developing a 7 week Flat
Base (FB) with its Pivot Point at $42.15. 
Meanwhile SAY is developing a 7
week Handle with its Pivot Point at $26.25. 
The Guidance for our Long Term and Short Term Strategies are
shown below. Remember the proper time to buy any 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 |
| GILD |
Medical |
7 Week |
$84.50 |
$81.50 |
4,300,000 |
$95 |
| Biotech/Genetics |
Flat Base |
| 34 |
|
| PRXL |
Medical |
7 Week |
$42.15 |
$40.15 |
253,000 |
$50 |
| Dental
Supplies |
Flat Base |
| 77 |
|
| SAY |
Computer |
3 Month Cup |
$26.25 |
$24.25 |
966,000 |
$32 |
| Services |
with a |
| 57 |
7 Week Handle |
Short Term Strategy
| Symbol |
Sector/ |
Chart |
Pivot |
Stop |
Average |
Target |
| RS
Strength |
Pattern |
Point |
Loss |
Daily |
Price |
|
|
(Buy Price) |
|
Volume |
|
| GILD |
Medical |
7 Week |
$84.50 |
$83.50 |
4,300,000 |
$85.50 |
| Biotech/Genetics |
Flat Base |
| 34 |
|
| PRXL |
Medical |
7 Week |
$42.15 |
$41.15 |
253,000 |
$43.15 |
| Dental
Supplies |
Flat Base |
| 77 |
|
| SAY |
Computer |
3 Month Cup |
$26.25 |
$25.25 |
966,000 |
$27.25 |
| Services |
with a |
| 57 |
7 Week Handle |
Meanwhile here are a few stocks that are currently developing a
very small Handle but need to work on their Handles for another week or two.
CRM is beginning to develop a small 2 week Handle (H) .
PDE is beginning to develop a small 2 week Handle (H) as well.
WFT is beginning to develop a small 2 week Handle (H).
Finally Zolt is beginning to develop a small 2 week Handle (H)
as well.
As I mentioned above will be watching these stocks closely over
the next week or two to see if they can continue to develop a constructive
Handle.
Amateur Investors
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