7Feb09 Where Do We Go From Here ?

7feb09 - Post Market Review

SPX rose above 850 immediate resistance region to 869 and promptly stopped at MA50 resistance at the same value. Volume was slightly thinner than Thurs' session but was still 2nd highest registered for last week's session. Both RSI and MACD suggest a possible continuation.

Naz also registered a nice upward punch to a trendline resistance at ~1590-1600 region. What is significant, was that Fri's rally took out Jan28's high rather convincingly, lending some strength to the surge yesterday. Volume was also thinner compared to Thur but overall higher than the average of the week. MACD is gaining rally momentum but daily RSI is suggesting reaching an over bought region. Watch this trendline resistance at ~1590-1600 region carefully; any breakout can cause market participants to possibly fuel rally further. Naz index has been coiling tighter into a triangle pattern...
However, given both an over bought situation and the immediate resistance, it may not be surprising that index may be retarded in the short term.

DOW ended the week at 8281 and is still considered to be in a short term bear trend, since Jan09. The volume increased over Thur's session and is considered an "accumulation" day.
It needs to go higher than 8375 to technically "kill" this short term down trend. This ~8375 hence is now the next immediate resistance that DOW must convincingly clear to attempt the next resistance at ~8450....and the next at 9050, the first of several fibo retracement resistances. Frankly, all indexes will have many obstacles ahead... DOW will need alot of redbull, and really sexed up to possess the energy to clear the SOC (standard obstacle course) ahead....

Overall, as indexes climb higher, the upside risks will increase. Some quarters will suggest buying after resistances are broken, which technically, is not a wrong advice. However, given we have a very contentious economy to worry about, I'd rather sneer at this technique for the moment. If I should be bullish after now, my entry would be at relevant supports. Remember, we make money with bullish positions by buying LOW, not higher prices (something, which I do not agree with CANSLIM approach)

Good luck and HUat HUat !!!!