SPX 1460 & $SOX-SMH 7yr TL - 7 mo Trading Range
Premarket: We have a very good news this morning from Iran-Sailors release. This development is certainly positive for the market. It is a very good thing that the incident is resolved without a serious conflict. Oil is trading at support. I hope that market takes the good news as good news!
Market reaction to the 8:30 econ news is relatively mute since a little weaker number will ease the inflation worry.
Market Commentary 4.4.07
With a good news from Iran-Sailors issues and a good earning report by "Best Buy", market traded up in narrow range as noted yesterday that having a consolidation day and a follow-through day is certainly positive for future price advance. A caveat or a mixed message was that ISM service number was weak which could be seen that the Fed could be holding or lowering interest rates. "MSFT" was upgraded by citi, as a result it finished with 2.36%. I noted weak internals, A/D, during the mid day that market would be much weaker if MSFT wasn't upgraded. A/D finished with NYSE 1.14 and Nasdaq 0.83 which is not strong considering "BBY" and "MSFT" upgrade news. We will see narrow market leadership during this advance; therefore, individual stock selection will be more challenging.
Qs 44.38, SPX 1440.16 Intra resistances
DOW 12541.51, and Nasdaq 2461.49 Higher High
Qs 44.38 and SPX 1440, the intra-highs, are the intra resistances which were the top of the recent "W" - "Cup & handle" formations shown on 60m charts. The narrow range consolidation which we have seen today is positive. Note that SPX, Nasdaq, and DOW made intra higher-high above the recent Mar '07 high -- this is a good technical signal.
With "BBY" news, KLAC-TXN-AMAT finished with good gains. If market hears another good news like "BBY", $SOX/SMH will break out to upside from "7mo Trading range".
$SOX 7yr/7mo: $SOX-SMH traded in a 7-mo trading range after 3-mo rally when I alerted cyclical reversal in Jul 2006. $SOX and SMH have "7yr down TL" resistance as well as 7-mo trading range resistance; therefore, breaking above the current trading range will be significant. I posted $SOX 4yr cycle chart during Jul 2006 as a part of $SOX reversal call analysis. As shown below on the $SOX monthly chart, it is trading at the 7yr down Trendline.
In Summary: The "Breakout Retest" Scenario market action which I commented is progressively confirmed by the recent price actions. The "Breakout Retest" shown on the weekly charts projects filling the runaway-gaps, retesting the Feb 07 highs, and, technically, making new highs. I will be reassessing market strength at the "Double Top" to project further price advance to new highs.
http://www.stockchar...09398&r=598.png
http://www.stockchar...77535&r=859.png
http://www.stockchar...40300&r=617.png
http://www.stockcharts.com/c-sc/sc?s=$SPX&p=60&yr=0&mn=2&dy=15&i=p73797548221&a=79285156&r=517.png
http://www.stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=9&dy=0&i=p22648394504&a=76929034&r=579.png
http://www.stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=4&mn=8&dy=0&i=p49229126946&a=78987374&r=825.png
http://www.stockcharts.com/c-sc/sc?s=$INDU&p=D&yr=0&mn=10&dy=0&i=p31631774778&a=76966992&r=329.png
http://www.stockcharts.com/c-sc/sc?s=$INDU&p=W&yr=4&mn=0&dy=0&i=p63151936612&a=76929550&r=145.png
http://www.stockcharts.com/c-sc/sc?s=$COMPQ&p=D&yr=0&mn=8&dy=0&i=p21609042622&a=76909044&r=764.png
$SOX-SMH 7yr Cycle - 7 mo Trading Range
http://www.stockcharts.com/c-sc/sc?s=$SOX&p=M&yr=10&mn=11&dy=0&i=p22616739083&a=80631671&r=966.png
http://www.stockcharts.com/c-sc/sc?s=$SOX&p=D&yr=0&mn=9&dy=0&i=p93451941454&a=71270540&r=427.png
http://www.stockchar...98557&r=872.png
OIL is trading at Support
http://www.stockcharts.com/c-sc/sc?s=$WTIC&p=D&yr=0&mn=11&dy=0&i=p13431343965&a=80157012&r=368.png
China $SSEC bull market makes new high
http://www.stockcharts.com/c-sc/sc?s=$SSEC&p=D&yr=0&mn=6&dy=0&i=p02439948996&a=66381250&r=667.png
Edited by Trend-Signals, 05 April 2007 - 08:10 AM.
But I do believe that "8 yr Cycle" is a common cyclical pattern.
