The Correct Call

As we noted on August 6th, all of our market indicators are like a 3rd base coach waving us home for the game winning run. Friday’s rally only made his arms wave faster, but obviously our indicators can’t account for ex- KGB agents who are out to prove a point.

Politics, war and peace will most likely be the driving factor for the market’s direction early in the week. If the situation settles down relatively quickly in Georgia, then stocks will have yet another reason to rally, a wider war averted. If Russia and Putin are up to no good are using the current situation as a land and oil grab, as some analysts fear, the situation could escalate and possibly involve the US and NATO, which would be real bad for the markets. Let’s cross our fingers.

Index Technical Analysis

If political events allow, the indexes are poised to go higher.

The Dow is sitting right on its resistance at 11,734. It would be great news if the Dow could move higher as the next stop is 12,000-12,250. The S&P 500 is at a minor resistance level of 1300. This level should be easy to move through and 1325-1375 is on the horizon. The NYSE is looking the least healthy of the indexes. It has recently put in a double top at a hair under 8600.

The NASDAQ is clearly leading the way, which historically is good for the market. Its angle of ascent is accelerating, indicating it’s in the beginning of a possible powerful upward movement. The NASDAQ could trade up to its 300 day moving average of 2450. Trading above the 300 day average is usually interpreted as a bull market. We are not ready just yet to make that call, but wouldn’t be surprised to see the NASDAQ test bull levels. Investors looking to profit from a potential handsome rally in the index can own QQQ or for double the return ProShares ULTRA NASDAQ 100 (QLD) are the ways to go.

Tags: interest rate model, interest rates, long term investments, oversold, QLD, short term trading models, short-term indicators, stock buyers, stock market, stock markets, stock sellers, undervalued stocks, volume

This entry was posted on Monday, August 11th, 2008 at 7:04 am and is filed under ETF Screener, Stock Market Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.