Market Analysis and Forecast for May 12, 2009
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Market Analysis and Forecast 2009 May 12
Profit taking
Markets are still trading above intraday supports which noted below after markets bounced off from the SPX 896.46 which is the lower support from the price channel - Nasdaq 1695.87 and QQQQ 33.52, respectively . DOW bounced up from 8366.65 support. The major markets reversed around 1 pm finishing the day with hammer formations at the intraday supports. Even though we have seen piercing the first support area today as noted LOD (low of day), closing above hammer formations above the pivots is not encouraging. SP500: 900 /880 /850
DOW: 8400/ 8250 / 8000Nasdaq: 1700/1660/1620
QQQQ: 33.50/33/31.50
Markets are very overbought as many stocks are already traded up over 100%, and chasing overbought markets will mostly result in significant loss, except day trading and VST trading.
Pivot range
Pivotal area: SPX 920-888
With the intraday reversal today, markets are now relatively better positioned noting significant price supports even though markets are very overbought as we can see Goldman Abby comment on CNBC. With the comment, profit taking is better suited for the very overbought and extended markets.*** SPX 888
Key area which is pivotal juncture for a market correction.
SPX 875
Intraday bounce pivot
SPX 920 -930 is, of course, the red zone where some could be fooled into market hype. And, of course, markets could continue up. Higher markets goes up, further sell-off will be.
* QQQQ 33 +/- pivot
* QQQQ 31 +/- unfilled gap
QQQQ 60min
Since the Fed Bernanke has spoken on the 60min interview, markets have not fallen below the 200dma as shown on the QQQQ 60min chart, as example.
We now see a converging 50/200 with which we may be a confirmation of a ST trend reversal, as weekly price actions are very overbought.
As noted, Qs bounced up from 33.50 and closing below 200 ma on 60min gives us a confirmation.
QQQQ Daily - very overbought
We have a tight trading range for the last several days as shown on the QQQQ daily chart trading above the 200 dma. It again closed at 33.93 above it today.
* With the 60min actions: Qs bounced up from 33.50 and closing below 200 ma on 60min gives us a confirmation.
* With the 31 +/- unfilled gap, a market correction would be reasonable expectation.
Nasdaq Daily - very overbought
Nasdaq led the recent rally, and now it is showing a sign of leading the markets to downside even though price action does not reflect it yet. Internal momentum is showing an early sell signal after showing a few weeks of neg D breadth momentum.* We have not hear "Profit Taking" yet, hence, it is wise to take profit before many rush out the door.
* Markets made easy 100% rally on the Obama - the Fed hope speech, and now markets are very overbought.
* It's time to take profit. Don't chase overbought markets.
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