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Chart Review

  • August 2, 2002
  • Dan Chesler


The stock market finished the week by
declining for two straight days on lower volume. Most of the
weakness has emanated from the Semiconductor

(
SMH |
Quote |
Chart |
News |
PowerRating) and Software
(
SWH |
Quote |
Chart |
News |
PowerRating) sectors.
The Nasdaq 100
(
QQQ |
Quote |
Chart |
News |
PowerRating) ETFs have closed
the Friday-Monday gap and are now only a spit away from their July 24 lows. 

Other broad market ETFs, such as the S&P 500
SPDRs
(
SPY |
Quote |
Chart |
News |
PowerRating), Mid Cap
(
MDY |
Quote |
Chart |
News |
PowerRating) and
Dow Diamonds
(
DIA |
Quote |
Chart |
News |
PowerRating) have filled their
respective Friday-Monday gaps, but are still a fair distance away from
threatening their July 24 lows. The market must find support quickly in order
to avoid plunging into the abyss one more time.

Rather than getting into
a discussion of where we sit within the bigger-picture market cycle, and how
last week’s action reflects a typical climax low that is now in the process of
being re-tested, I’m going to focus on a few ETF and commodity charts that
have caught my attention. These are the charts and markets that I’ll be
watching carefully (stalking) over the next week or so.

Biotech
HOLDRs
(
BBH |
Quote |
Chart |
News |
PowerRating): The BBH has had a great run and is
now correcting. The Friday-Monday gap at 7272-7380 would be an ideal spot to
look for long entries.


 


U.K. iShares
(
EWU |
Quote |
Chart |
News |
PowerRating): Appears to be making
a small bull flag on the daily chart. This pattern could fall apart depending
on how the U.S. markets act early next week, but still worth watching in my
opinion.


 


Cotton, October 2002 contract: The cotton
market is in an uptrend, trading at the upper end of a three-week trading
range, with declining ADX. Cotton looks poised to take out the top of its
trading range, and potentially going to much higher levels.


 


Wheat, December 2002 contract: Wheat,
along with the entire grain complex, has been on a tear lately. The trend is
UP and STRONG in grains. I would look to be a
buyer on weakness, especially in Wheat and Bean Oil.


 Have a great
weekend.

 


DanÂ