What The Weeklies Are Telling Me

• June 30, 2003
• Dave Floyd

As
we come into month end and month beginning, after such a strong run
since March, here are the weekly and daily levels I will be looking at closely
from a long-term perspective.  From the weekly perspective, I suspect we will
stay in a large trading-range type of market.  We forayed into very long-term
significant resistance the past two weeks, and the market has already begun to
work off some of the overbought-ness and hopefully along with it the bullish
sentiment out there (as indicated by the sentiment indicators).  For a lesson on
long-term trading ranges, study the American market from 1966-1982 (or take a
look at the Nikkei from 1993-2001).  There were great swings both ways as range
went through expansion/contraction periods, yet there were also some very tight
periods.  There were mini-bulls and mini-bears from sector to sector, as well. 
So far this market has displayed similar characteristics, and unless we break to
new lows, I will continue to view this rolling, pendulum-type of action as being
the norm rather than the exception. 

On to some charts:

SPX weekly and daily charts below explain why I am
watching 925-930 closely:

 

 

 

 

 

 The
weekly/daily charts of the SOX, below, show why 354-355 and 336-343are key:

 

 

 

 

The Dow weekly chart below shows  8613-8618 to
be a key area on any pullback:

So until proven
otherwise, I suspect the market will continue to wax and wane, and some sectors
will run with the bulls while others will be mauled by bears.  Don’t overstay
your welcome in any one sector in such an environment, for it is truly a
trader’s market.  At the risk of preaching to the choir on this, buy-and-hold
forever and short-and-hold forever don’t work to well in such an environment. 

Have a great trading week.  As always, feel free to
email if you have any questions.

Bo Harvey

bo@aspentrading.com