Posted by 2 February 2006

February 2, 2006 Stock Market Recap

Yesterday’s big gain in the Dow was wiped out and then some. Today’s action did a bit of damage to the technical landscape: the S&P broke its trendline again and is perched just above its 50-day moving average; the NDX (QQQQ) broke its 50-day moving average and appears set for a test of its trendline; and the Dow closed just under its 50-day moving average. We could be in for an interesting few days as (if) these lines get tested.

Below are charts of The Nasdaq, S&P 500, QQQQ, Banking Index (BKX), Google (GOOG) and Apple (AAPL):

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Comments

  1. Posted by Doc Dan on February 2, 2006 at 10:16 pm

    Mike, really enjoy this daily wrap up. It’s a good comparison to my own thoughts.

  2. Posted by Joshua on February 3, 2006 at 12:03 am

    I just wanted to say you have a very nice blog here.

    Excellent work and excellent site.

    http://www.mauitrader.blogspot.com

  3. Posted by Phil on February 3, 2006 at 6:26 am

    Mike,

    I think you are turning pessimistic in your old age!

    To me, this looks like global sector rotation rather than a sell off. All the 2005 leaders were hit hard yesterday yet money poured into airlines?

    My theory for today (I’ve been writing about this all weeek) is that Europeans are switching their bets from Asia to the US and US equities are moving from Energy/Small Caps back to the mainstream investments.

    If I’m right all these 50 dma’s will hold and you’ll see a big uptick in the walking dead of the Dow and S&P.

    http://stockcharts.com/gallery/?%24spx

    Rather than focusing on the 50 dma, take the longer perspective of the weekly, we are firmly channeled in the top of that band and are probably flagging up.

    Diamond and QQQQ spreads are really worth watching right now because, one way or another, we are breaking out!

    Thanks for inspiring me,

    - Phil

  4. Posted by Michael on February 3, 2006 at 7:45 am

    Thanks guys. Phil, you may be correct abou this simply being a rotation but what I see in the charts doesn’t show that small caps are being sold. THe smaller caps indices are holding up better than the larger cap ones.

    Also, I never said that these tests would fail so I don’t see that I’m being a pessimist. I thought I just stated the facts. I’m really not one for predictions. I’m just trying to recognize the possibilities (probabilities) and act accordingly if & when they come to pass.

    P.S. And who are you calling old?!?!??? :-)

  5. Posted by paul on February 4, 2006 at 9:45 pm

    Mike you are a god,but I wondering when you day trade what minute do you set your real time charting to.

  6. Posted by Michael on February 5, 2006 at 9:48 am

    Paul,

    I use 15 minute candles/bars on my charts. Check out some of the Trade Examples category to see some of my chart settings.