Sunday Market Insight, Defining the Trends

Posted by Blain Reinkensmeyer
March 23, 2008 at 9:45 pm

The market ended last week both with positive gains and also with positive momentum. With the fed cut and Bear Stearns news behind us, could we really be ready for a rally?

At the close Friday both indices still finished within their current horizontal channels which can be seen visually below. Momentum suggests the NASDAQ and S& P 500 are both set to break out of these channels to the upside.

The Market

Starting this week I am going to report the market from a short term, medium term, and long term viewpoint based on the moving averages (10, 50, 200) of the Nasdaq Composite.

Short Term: Uptrend*
Medium Term: Downtrend
Long Term: Downtrend

*Changed from last week.

What You Should Know

This week I am focusing in on trends so let’s break down the groups first that have been in focus here on the blog and secondly with groups that have hit my radar.

Gold - Gold tumbled from $1000 all the way down into the low $900s last week, and with the sell off came the reversal of many stocks I’ve been closely following on this blog. Some may think this is the end of gold, but I am not convinced. A 15 - 25% price correction would be healthy and nothing to fear. Look for the 200 day moving average as your next major support point, and look for these stock to make very quick price reversals when they are ready. (Stocks / ETFs in focus: GG, GOLD, AUY, BGX, GLD, ABX, BVN)

Steel - As volatile as prices have been for Steel stocks all three of the stocks I’ve been closely following are holding up above key support points. In fact, for those looking to step into Steel this could be a great opportunity. I like MTL at the 50 day moving average, and AKS is still holding its $49 support level. Keep stops tight and be on the lookout for these stocks to possibly make another run. (Stocks in focus: STLD, MTL, AKS)

Oil / Gas Explorations - This group has begun to show signs of weakness and deterioration. More than a handful of these stocks have now had failed breakouts and are showing great weakness. Even EOG has shown it will may not be at new highs for perhaps a very long while. For those though still with faith a few stocks to closely watch still in this group are BZP, CXO, and RRC as they still are holding up.

Fertilizers - I warned weeks in advance of this group starting to show signs of breaking down. All three stocks I’ve tracked (MOS, POT, CF) finished this past week under their 50 day moving averages. Out of the three POT is the only one arguably “holding up” even though its future too looks bleak. These stocks may take some time before they are back in focus.

With the above groups aside, I can now direct your attention to some new areas I’ve found myself drawn too. These groups may be the start of a new long term uptrend, or just a short term spotlight. Either way you will more likely then not be seeing me mention their names this week.

Financial Services Misc. - MA, V, NYX
Retail Discount - DLTR, FDO, NDN
Building Residential / Commercial - RYL, GFA, HXM, MOH, HOV, DHI

A lot of articles and interviews I’ve seen since late last week suggest big tech will be at the forefront of any upswing. Keep an eye on the likes of Google, Apple, IBM, CSCO, etc. this week.

And to finish the post tonight I have a chart of the NASDAQ Composite,

See you tomorrow morning.

If you enjoyed this post, make sure to Subscribe to the feed (you can also subscribe with free email updates). Then, check out the Investors Forum (New members register here!)

Share Your Knowledge »

Pingback by Blainâ€™s Nightly Stock Picks, March 24 2008 | Stock Trading To Go

2008-03-24 18:11:17

[...] markets as news of JP Morgan raising its bid for Bear Stearns to $10 a share had the market giddy. As predicted techs lead the way with the NASDAQ racing ahead 3% on the [...]

Reply to this comment

Pingback by Morning Stock Report, March 26 2008 | Stock Trading To Go

2008-03-26 09:04:53

[...] a strong rebound push yesterday with most gold stocks up 6, 7, even 8%+. If you recall on Sunday I stated, “…look for these stock to make very quick price reversals when they are ready.” [...]

Pingback by Blain’s Nightly Stock Picks, March 26 2008 | Stock Trading To Go

2008-03-26 19:50:33

[...] my trends post from Sunday night and you will see I mentioned that US oil & gas exploration and production stocks were basically [...]