Financial Solution News

I charted the??NASDAQ NMS Composite Index ($COMP) for the past year’s daily price action ending August 29th, 2008.?? At a glance this chart could look like it’s leaning bullish, but when you zero in on some details that bull might not be a good buy.

At a glance you could see that the Naz broke the downward trend line of lower highs, but when you look closer you see that break was only intraday and could not have a repeat close higher.??
At a glance you could see a nice uptrend of higher lows started in July, but when you look closer you see that trend already broke when it hit that line slightly above 2400 that has come into play more than a few times this year.
At a glance you can see that the $COMP is above its 50 day moving average, but when you look closer you see that it […]

Original post by Alex Fotopoulos

My Sunday series of index charts continues today with the S&P 500 ($SPX).  This time I took a shorter view and only went back three months to see a daily view of the price changes.  The SPX is getting to an interesting place in its trend line movement.  The longer term downward trend of lower highs is coming to a point soon with the upward trend of higher lows.  One of the trend lines of higher lows broke last week, but then recovered.  The S&P 500 even rallied above the 10, 20 and 50 day moving averages for a strong finish to the week.
With the close on Friday finishing near the trend line of lower highs, I expect a (maybe brief) pullback to lower trend line of higher lows.  As volatile as this market has been, I don’t expect those lines to hold more than another week.  If they did, […]

Original post by Alex Fotopoulos

I charted the DJIA (previously $INDU) again today.  I was actually surprised to see the chart show it looks like we have some bullish room to run still.  The latest trading channel shows the DJIA is near its trend line of higher lows.  12,000 is the big question mark for this chart.  It was a floor for the Dow in the first quarter of this year and then was a speed bump on the way down in June.  Now we get to see if it will stop the current upswing.  As luck would have it, the trading channel I mentioned at first shows that the trend line of higher highs could coincide with 12,000 and give it a double reason to take a break.  The question will be if the trading channel holds the power to get through of if 12,000 is too tough to pass.
You can see a change […]

Original post by Alex Fotopoulos

I charted USO this morning to get an idea of where the price of oil might find support.  Don’t get too excited when you see these numbers, USO and the price of oil are not equal and do not move dollar for dollar.
USO is down more than 20% from its high, making it a technical bear market for oil now.  How quickly the tides turn.  (I’m leaving for the beach in two hours, so I had to figure out a way to mention the tides.)  The 90 range was somewhat of a ceiling and then a floor in March and April.  USO is edging closer to it now and could hold support.  What could help that range offer support is the year long trend line of higher lows that started last August and touched again in January and February.  The longer trend lines tend to have more “power” for support […]

Original post by Alex Fotopoulos

The Russell 2000 (”$RUT.X” in TD Ameritrade and “^RUT” in Yahoo! Finance) has been bouncing around a trading channel this entire year.  What is now a ceiling for this price on the chart was the floor for the second half of last year.  I won’t believe this channel is broken (in either direction) until we get two or more consecutive closes above or below the lines I drew around $650 and $750.  RUT closed at $716 on Friday, August 1st, but just broke a down trend line of lower highs two weeks ago.  That break held support this past week at the same price range that has acted as intermediate support for most of the year.
Staying above that thin line I drew below around $690 means the Russell 2000 is comfortably in the middle of its trading channel and makes it harder to pick a direction.  The biggest bullish factor is […]

Original post by Alex Fotopoulos

This morning I charted the three year weekly chart for the S&P 500 ($SPX.X) ending Friday, July 25, 2008.  I started off trying to find a bullish trend line I could point out that showed something positive for us to see and went all the way back to the 20 year view before I decided that we all know markets go up over enough time and I should focus on what’s happening in the nearer term.  That’s how I ended up charting the three year S&P 500 again.
Every trend line I drew points down meaning that all previous bullish trends have been broken recently.  We even broke below the June 2006 lows this month.  Now the October 2005 lows are within sight.  The question might be how long before we get down there versus if we’ll get down that low.
To find a positive from the trend lines, I can point out that we […]

Original post by Alex Fotopoulos

Chesapeake Energy (CHK) has seen better days, including back up at $60 where I sold two naked puts.  I charted it today to see where I should price some naked calls to try to cut my losses some, but was surprised with the action I decided to take.  The way I chart CHK’s stock, the downside is relatively limited compared to the upside.  The key word here is “relatively”. 
CHK is hitting a possible trend line.  What was the trend line of higher highs before it broke out at the beginning of this year, could offer a support range.  The 50 week moving average happens to coincide with that same price point giving extra support.  If the 18 month trend line of higher lows ends up being the support line, CHK could go as low as 40 or so.  That’s just above the 100 week moving average as another coincidence.  With […]

Original post by Alex Fotopoulos

I’m charting the oil ETF USO again after I last charted USO at the end of May.  I drew a few trend lines then and as our (those who eat and drive) bad luck would have it, the shorter trend line of higher lows held support.  That same line is still holding and the price of oil looks like it still has room to climb.  USO is also an optionable ETF making it an easier trade to make using less money.
The best part of the chart for oil bears is that USO (note that USO’s price does not equal the price of a barrel of light sweet crude, but moves in the same patterns) just hit a ceiling of higher highs that has offered a stopping point for the rise for the past month.  That would lead us to believe that oil should drop some next week as it digests the run up […]

Original post by Alex Fotopoulos

The Dow Jones Industrial Average (ticker: $DJI) hasn’t recovered since I wrote about the trend line break two week ago.  In fact a second break occurred on June 26th and now the old support level (floor) is acting as a ceiling as the downward trend continues.
The DJIA’s 10, 20, 50, 100 and even its 200 day moving averages are far above its current trading price.  Each could act as a road block on the Dow’s way back higher, whenever that day comes.  I’m not calling for a sustained rally any time soon although we’ll likely see some bull runs mixed in before we find some real footing.
Today’s my 37th birthday, so I’m cutting this post short to go do birthday stuff with my family.

Original post by Alex Fotopoulos

Last week I charted the Dow Jones and said the break of the trend line was a bearish indicator.  The only hope would be that the $DJI didn’t stay below that line the following two days.  Instead, the $DJI edged lower and we ended up with a horrible Thursday well below that line.  I’ve made my point on the Dow’s direction, so today I turn to the S&P 500 ($SPX.X) to chart.
Starting with the good stuff, the January 23rd low was 1,270.05, the March 10th low was 1,272.66 and the low on Friday, June 27th was 1,272.00.  That’s a pretty solid floor, not counting the March 17th low of 1,256.98. 
The uglier side of the story is with the trend lines and moving averages, the VIX and history.  For the past month and a half the lows have only gotten lower each time it bounces back down.  The 10, 20, 50, 100 AND […]

Original post by Alex Fotopoulos