Inducing Labor
I’m fortunate that my wife, in
delivering both of our children, had a C-section. It was over very
quickly — for me at least. She would, of course, say that she was anything but
fortunate given the post-operation discomfort. But that’s the mother of all separate issues. The point I’m trying to make is that with
today’s action, it looks like the market got injected with some Oxytocin — giving
birth to the kind of movement we haven’t seen in awhile.
Nevertheless, I recommend keeping the simple lines that we simpleton chartists
use in the back of your mind.
On April 27, I gave you a chart of the Naz that suggested we were coming up
against resistance. That resistance turned out to be potent enough to keep us
in a holding pattern since then.
Here I’ve updated and modified the chart somewhat. This is a weekly chart
of the Naz, but using a logarithmic scale. Based on it, the little pullback
we’ve seen comes nicely off a downsloping trendline, the 50% retracement off
January highs and April lows, and the old 1999 support level. The market is
facing some stiff challenges here. A breakout above this area would certainly
be a milestone in getting us out of this mess. Today’s action is shoving us
into potential breakout zone.
As you are probably aware, I’ve been watching the
(
SOX |
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PowerRating) rather
closely. It has been pulling back nicely from the upper-channel resistance that I pointed out
several weeks ago. Again — today’s action has the potential to break the pattern.
Of somewhat more ominous texture is this
long-term chart of Intel
(
INTC |
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PowerRating). But look at the short-term. INTC is
attempting a breakout on an outside day. If momentum holds, this could change
the long-term outlook. If it caves in, there are ample
support possibilities in this already badly beaten up stock. BTW, if that sounds like I’m being wishy-washy, let’s just say I’m thankful that many of the traders I admire the most are also wishy-washy.
Here is one that pretty much is a textbook example of being “at the
crossroads.” Applied Materials
(
AMAT |
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PowerRating), from a technical standpoint, is
right where I think those options players put on butterflies and combinations,
looking to collect the premiums off expired puts and calls. Get this. AMAT is
right at the round number of 50, sitting on its 50-day moving average, at its
50% retracement (April highs and lows), and just under its 200-day moving
average. It’s been in the Zone of Going Nowhere since Nov. 99. Today’s action
may change all that, however.
