Our technical analysis involves the studying of charts of securities and market indices based on multiple time frames. We look at daily, weekly and monthly charts to determine the highest probability for the future movement of the security or index. The longer the time frame, the more weight which is given to the indicator.
For example, if a monthly chart is at or near the bottom, it is more indicative of an upside potential than if the daily chart is at or near the bottom. If you are looking for a “quick hit” on a stock or index, then the daily chart would be a useful tool for predicting the future movement of the security.
In conjunction with the multiple time frames, we also utilize channels, moving averages, trend lines and stochastic oscillators in order to supplement the multiple time frame charts.
Weekly charts updated last on 01.05.08:
......Dow
We finally got our major – a swing to the upside for the week – with the Dow gaining +6.1% last week and ending up -33.84% YTD (not counting dividends). Both the daily and weekly oscillators are in an upward position now, which would suggest for us to play this index from the long side.
We stated that the 8,500 mark was an important level. Not only did it hold, but the market closed above the 9,000 mark – a very positive sign. As we have stated for a few weeks, however, we must remain cautious. The last week was extremely low volume and therefore the upward movement can be slightly tainted. Wait and see what happens when the majority of the big players are back on the job.
......S&P 500
This and the Dow chart continue to look identical. The S&P gained 6.8% for the week and ended up being down -38.5% YTD excluding dividends, and like the Dow chart, the weekly and the daily oscillators have turned positive.
Continue to sit on the sidelines and wait to see if the upward move holds after the major traders are back from the holiday.
......Nasdaq 100
The daily oscillator, like the Dow and S&P, has turned and is heading north thanks to a big week. The weekly oscillator, after flat lining turned to the upside.
The NDX gained +6.6% for the week and finished the year down -41.9% YTD (excluding dividends). Stay on the sidelines with this one until we confirm the move next week. Otherwise it would be a play from the long side.
......Russell 2000
The daily and weekly charts, like all the others, are telling us it may be time to look at the upside. But once again, last week’s volume for the big up move was feeble due to the holidays and we will see the true direction after a few days this week.
The Russell 2000 gained +6.10% last week and finished the year -34.89% (excluding dividends). Remain cautious.
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