Here’s What I’m Seeing On The Weekly Charts


The major
indexes were able to put together a solid week, as market players were finally
able to put aside many of the worries
that plagued the equity markets in prior
weeks.  Gains were seen across the board, with most sectors participating in the
advance.  Tuesday’s FOMC meeting was the big event of the week where the Fed
largely maintained their hawkish posture from prior meetings.  However, in a
strange turn of events, 90 minutes later the Fed suggested they accidentally
omitted part of the statement (wink wink).  The omitted part stated that
long-term inflationary pressures were contained.  This statement set the stage
for a sharp rally on Wednesday, as the omitted statement seemed to calm the
markets.  Thursday and Friday’s sessions saw little follow-through, due to debt
downgrades at General Motors and Ford.  Friday’s stronger-than-expected April
Employment Report caused worries to resurface regarding a more aggressive Fed.

The June
SP 500 futures closed out the week with a gain of +12.75 points, while the
Dow futures posted a better relative gain of +140 points, with both posting
gains for the 2nd week in a row.  On a weekly basis, the ES tested and was
rejected at its 10-week MA and weekly downtrend line.  Looking at the daily chart, the
contract posted a bearish engulfing line and has confirmed its bearish Gartley
to give a first target of 1156.  The YM broke its weekly downtrend line,
but was turned back at its 40-week MA.  It has also confirmed its Gartley
to give a first target of 10183.  For you daily
3-Line Break followers, the ES remains long with a Break Price of 1139.75,
while the YM is long with a break price of 10073.
  

 

                         

It was kinda
nice to see the major indexes finally stop moving down this week, however, it’s
probably premature to suggest that the equities markets are out of the woods
just yet, as far as further downside goes.  The key indexes have become so
oversold since March that some sort of snapback move higher was to be expected. 
Also, the number of bearish bets against stocks has reached levels that are
often associated with market bottoms.  While equities have stabilized, it has
also been quite obvious that the gains have been nothing major.  And nothing
will probably change until the uncertainty over further tightening by the Fed is
erased.  To top things off, Friday’s robust jobs data has now started talk of
the Fed raising rates by 50 bp in their June meeting. 

Here’s a quote I saw over the
weekend that I printed out and posted on my bulletin board:

“When your hands are stained
from reading entrails, and when your head is spinning from the nonsense served
up by the Street analytical Sons of Perdition, and when the Newsletter Rats fill
your mailbox with another batch of glossy solicitations, just remember to keep
it simple.”

Amen to that!

Please feel free to email me with any questions
you might have, and have a great trading week!

Chris Curran