Market Up, Q’s Soared

Editor's Note: below are just some trading ideas flow from our latest Headlines.

We've offered in the previous Market Outlook:

"Market had reached a short-term extreme oversold condition, a situation that is a precursor to a counter-trend rebound."

Stocks gained ground across the board Monday with the NASDAQ gained more than +28 points or +1.06% to 2753. The trading action was very consistent to what we've predicted in our Friday evening "Cubes Speculator Bulletin":

October 19, 2007 @ 10:30 PM:

• "Buy the dip…the Q's is likely to move lower Monday. Expect a test of …$53, if the Q's manages to lure some bargain hunters around the $52 level".

The Q's bounced off nicely after an initial lower move into the $52 level (the exact morning low was $52.02) was greeted by a new wave of buying interest. The stock reached as high as $53.12. The newly in-the-money call option setup gained about +30% intraday.

 

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技術前瞻：短期反彈在即

Editor's note: this column was originally published on Capital Essence's CEM News on October 19, 2007. It's being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

這是Capital Essence對2007年10月22日 (週一) 的市場技術分析。

我們在上週一的 前瞻分析中指出："股市已經到達跨越所有分析時段的超買區域，進入了關鍵整固階段的前奏狀態……即將到來的盤整不但明顯還很迅速。"不出所料，上週五美股 低開，道指重挫367點，報收13522點，跌幅達2.6%。然而和20年前的黑色星期一相比，上週五的損失還不算大。道指在那個週一暴跌了22.6%。

總而言之，上週五對華爾街來說是非常糟糕的一天，儘管當日情況並非完全出人意料。事實上，上週五的交易狀況和我們之前在"Cubes Speculator Bulletin"文章中的預測非常一致。

編者註："FXY與標普500指數"的比較圖最早刊登在2007年10月18日Capital Essence的Cubes Speculator Bulletin上。現在，該圖在此重新發佈，以饗讀者。

我們在10月18日"Cubes Speculator Bulletin" 的文章中指出："日元似乎有走高的趨向，而這對多頭來講可不是個好兆頭。圖中可以看出，日元在7月初期的看漲突破是夏季大規模拋賣的『前兆』(請見圖表上 方的2個藍色區域)。MACD同樣也給看漲突破一個沉重的『打擊』(請見圖表下方的黃色區域)。簡言之，美股正面臨大規模的殺多行情。"

上週五，Rydex CurrencyShares日元信託基金(FXY)上漲0.89%，從而確認了上週四的看漲突破。

與此同時，標普500指數上週五低開，下跌近40點，報收1500.63，跌幅達2.56%。當日交易的任何看跌期權盤中都可能獲得三位數的回報。

上週五的拋賣僅是長期上漲趨勢內部的一次短期盤整還是其他更壞情況的開端，還有待觀察。但好消息是標普500指數已經"離家更近了"。從上圖可以看出，經過上週五的巨幅拋賣，該指數已經運行至50日均線的支撐位附近。這一位置非常關鍵，因為它是股市重要參與者入場的地方。

從上圖可以看出，股市已經形成了"逢低反彈"趨勢(低點為50/200日移動平均線附近)——自2004年以來，執行"逢低買進"策略的投資者報酬 頗豐。當然，這並不意味著股市將由此攀升。在走高之前，股市可能會出現幅度大小不定的回調。因此，在"抄底"之前，尋找空頭投降的跡像是明智之舉。

總結：儘管股市很可能進一步下跌，但目前已處於短期的極端超賣狀態，這是反方向回彈的前奏。

(本文作者：Michelle Mai)

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注﹕Michelle Mai為Capital Essence(錢途集團)撰寫技術分析﹐並為包括市場趨勢在內的數份金融市場投資通訊的首席市場策略師。如欲每日盤前收到更多最新分析, 敬請訂閱。

Market is conditioned to a counter-trend rebound

Editor's note: this column was originally published on Capital Essence's CEM News on October 19, 2007. It's being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Monday October 22, 2007.

We've opined in last Monday's Market Outlook that "market has reached an overbought region across all time-frames, a situation that is a precursor to a significant corrective phase… the upcoming correction could be sharp and swift" – US market stumble out of gate Friday with the Dow lost -367 points or -2.6% to 13522. The lost was, however, relatively small as compare to that of Black Monday – on that October day, 20 years ago, the Dow Jones Industrial Average plummeted 22.6%.

Overall, it was a very bad day on the Street though it was kinda expected. As a matter of fact, Friday's trading action was very consistent with what we've predicted in our previous "Cubes Speculator Bulletin".

Editor's Note: the "FXY vs. S&P 500 Index" chart below was originally published on Capital Essence's Cubes Speculator Bulletin on October 18, 2007. It's being republished for the benefit of the loyal readers.

This is what we've noted in the October 18 "Cubes Speculator Bulletin": "the yen traded like it wants to go higher and this doesn't bode well for the bulls. [As you can see], the yen's bullish breakout in early July was a "tells" for the summer massive sell-off (see the 2 big blue boxes on the chart's upper panel). MACD had also given the bullish breakout a big "thump up" (see the small yellow box on the chart's lower panel). [In short, US market is] facing the mother of all bulls squeeze."

Fast forward to Friday:

The Rydex CurrencyShares Japanese Yen Trust (FXY) added on +0.89% Friday, and hence, confirmed Thursday's bullish breakout.

And the S&P 500 Index, meanwhile, stumble out of gate Friday, lost about 40 points or -2.56% to 1500.63. Any Put Option traded could have earned a triple digits return intraday.

Whether Friday sell-off is merely a short-term correction within a long-term uptrend or it's the beginning of something worse is remained to be seen. Though, the good news is: the S&P has got much "closer to home". As you can see, the index had moved into the area of 50-day moving average support after Friday's massive sell-off. This is a very important area because it's where big market players place their trades.

As you can see from the above chart, market has been conditioned to "buy-the-dip" [around the 50/200-day moving average] – a strategy that rewards handsomely since '04. This is, however, doesn't mean that the market will be rocketing higher from here. It could move a bit or a lot lower before it goes higher. So, it'd be wise to look for hints of selling capitulation before making the "bottom" call.

In summary, although seemingly vulnerable for further decline, the market had reached a short-term extreme oversold condition, a situation that is a precursor to a counter-trend rebound.

 

Until next time, good luck!

(By: Michelle Mai for Capital Essence)

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Note: Michelle Mai writes technical analysis for Capital Essence and is the editor of Capital Essence's "Market Outlook" newsletter. To receive the daily edition, please subscribe. It's now available at a monthly rate.