Market Down, Swing-Trader Bulletin Up

[Capital Essence NewsDesk] We've opined in our previous Market Outlook –see "The rally still has a leg albeit small one" August 23, 2007 - that

the upside reward could be limited to the four-week falling trendline. With that said, the rally still has a leg albeit small one

Chart 1.1 - as you can see, the bullish opening gap that propelled prices into the area of the four-week falling trendline resistant (see chart 1.2) was met with an aggressive wave of selling.

Chart 1.2 – as predicted, the S&P 500 Index closed lower followed the test of resistant at the four-week falling trend-line.

Despite the overall weakness, the "Swing-Trader Bulletin" continues to do incredibly well as a couple of the newly setup continues to show amazing strength against the tide. Vasco Data Security (VDSI) is holding a whopping gain of about 6% since profile 2 days ago. Blue Nile (NILE), RBC Bearings Inc (RBC), Cadbury Schwepps (CSG) …etc all hold attractive unrealized gains and are moving well on the expected direction.

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技術前瞻：反彈仍會繼續但幅度有限

Editor's Note: this is the free edition of the Market Outlook. To receive the daily edition everyday before market open, please subscribe. It's now available at a monthly rate.

這是Capital Essence對2007年8月23日 (週四) 的市場技術分析。

受TD Ameritrade和E*Trade可能合併的消息鼓舞，週三股市高收。券商股指數(XBD)因此上漲了近1%。

技術面而言，除非該指數能突破200日均線，否則券商股仍無利可圖。同時請注意看跌的50日均線和200日均線的交匯處——即所謂的"死亡十字"。

來看主要股指

上面是標普500指數的短期日線圖。昨天該指數收於200日均線阻力位上方。這很不錯。儘管如此，除非該指數攻下下跌趨勢線的阻力位，否則預計此次反彈幅度不會太大。反彈可能會在1475點位置附近失去動能。

上面是道指的短期日線圖。儘管昨天道指收穫了100多點，但該指數仍在看跌的"頭肩"型態的頸線阻力位下方位置運行。這不是好現象。請同時注意位於下跌趨勢線附近的下一個阻力位置。

總結：顯然，大盤的上漲空間可能會局限在長達四周的下跌趨勢線之內。所以，反彈仍會繼續，但幅度不會太大。儘管如此，在貿然交易之前，選個好的介入點才是關鍵。

The rally still has a leg albeit small one

Editor's Note: this is the free edition of the Market Outlook. To receive the daily edition everyday before market open, please subscribe. It's now available at a monthly rate.

Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Thursday August 23, 2007.

Equity market closed higher Wednesday as investors cheered the TD Ameritrade and E*Trade merger news.  The broker/dealer index (XBD) gained almost 1% on the news.

(Click on image to enlarge)

Technically speaking, until or unless the index trades above the 200-day moving average, the broker/dealer stocks are dead money!  Also notice the bearish 50 and 200-day moving average crossover – this action/behavior is also known as "dead cross".

Let's take a look at the major index charts:

(Click on image to enlarge)

The Standard & Poors 500 Index (daily) chart above addresses a short-term frame.  The index closed above resistant at the 200-day moving average today.  This is good.  Although, until or unless it manages to take out resistant at the falling trendline we do not expect the rally to run very far, very fast.  With that said, the rally is likely to run out of steam around the 1475 area.

(Click on image to enlarge)

The Dow Jones Industrials Average (daily) chart above addresses a short-term frame.   Despite the 100 plus points gain today, the blue chips index continues to trade below the area of the bearish "Head-Shoulder" pattern's neckline as resistant.  This is not very good.  Please also notice the next level of resistant at the area of the falling trendline.

Bottom line: apparently, the upside reward could be limited to the four-week falling trendline.  With that said, the rally still has a leg albeit small one.   Although, before rushing out to make that trade, a "good" entry point is all that counts.