Look for Continued Weakness in the NASDAQ

Friday closed the week red, again on light volume. Closing the week red across the broader markets on light volume gave the market a nice correction. This is the biggest drop the market has seen since the week of July 9th. Profit taking, light volume, lack of buyers, economic data all contributed to the weeks losses.

Nasdaq 100 and Nasdaq Composite both fell under the 50 day moving average (50dma). Both closed the week with a possible bearish engulfing pattern. Only problem with the pattern is the light volume which will require some work for the bears to convince us it is anything but a corrective pullback. S&P 500 also closed its third consecutive down day, also finishing the week with a possible bearish engulfing. The Dow put in its second consecutive down day on Friday, but left a red week with the other broader indexes and a possible bearish engulfing on the weekly as well.

Crude fell 25 cents on the day to close at $62.41. After being over $63 early morning trading, that is a big drop. Also closed the week with a loss, giving the crude price worries a rest for now. Gold also fell on the day 80 cents to close at $622.40. Which left the week green for gold by just over 3.00, given the mid week losing streak this was quite a come back.

Going into next week we have to watch these 50dma’s we’ve dipped under on the Nasdaq. Semi’s have also dipped under and
are threatening the 200ma now. Light volume is expected and it is a short week with Monday off and leading into New Years. So we could see a quiet week with fewer setups and that means we have to pick out spots. There is plenty of economic data, but no earnings. I also wouldn’t be expecting a lot of merger and acquisition news which have ruled Monday’s. We ended Friday on support levels so watching for a bounce and retest on Tuesday is what we’ll do.

Data for the Week of December 25th— 29th
Monday the US markets are closed for the Christmas holiday, Tuesday no data is due out, Wednesday nothing due out, Thursday 08:30 Initial Claims , 10:00 Consumer Confidence, 10:00 Existing Home Sales, 10:30 Crude inventories, Friday 10:00 Chicago PMI, 10:00 Help Wanted Index.

Some earnings for the week: lightest week of the year, only one company is on the calendar for the week and that is LTRE Thursday pre market.

ES (S&P 500 e-mini) Tuesday’s pivot is 1423.50, the weekly is 1428.50. Intra day Support: 1420.50, 1418.25, 1416.25,1411.75, 1408.75. Resistance: 1422, 1424.25, 1425.50, 1428.75, 1431.25. 60 minute chart is below.

ER (Russell 2000 e-mini) Tuesday’s pivot is 785.90, the weekly is 789.50. Intra day Support: 783.30, 782.8, 781.10, 780.10, 776.9, 775.50. Resistance: 785.5, 786.7, 787.5, 788.50, 790.20, 791.50, 792.7. 60 minute chart is below

I hope everyone has a great week as we close out 2006!

Teresa Appleton has traded equities and options for
nine years and futures for seven. She is founder and CEO of TradeLogic, LLC. For
more information about Teresa and the training she offers stock, options and
futures traders,

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