March 2, 2007 Stock Market Recap

About the only thing that went the bulls’ way on Friday was the decline in volume. It was another day of broad-based selling across the market. Just like on Tuesday, there’s a whole lot of red on the StockCharts Market Summary Page. All the major indices were down more than 1% and the only industry index which was up for the day was hardware ($HWI) with a 0.05% gain.

A couple of people have asked me if I see signs of a bottom or if Friday was a selling climax. I have to say no to both. The volume just wasn’t there for me to call Friday a capitulation day. I’m still looking for some reversal candlesticks which preferably will be made by selling in the morning and a late day rally. Once we get a day like that, especially from oversold levels, I think we can get a decent bounce for a few days.

Not surprisingly T2108 (% of NYSE stocks above their 40-day moving averages) took a dive along with the market last week. It’s at 33, so it still has room to go before reaching the buy zone under 20. (If you don’t have TeleChart, there are similar indicators at StockCharts.com, like $SPXA50R, $NYA50R and $NAA50R):

Here’s the Nasdaq which has finally hit oversold based on my stochastic setting. If/when it breaks last week’s low the November lows around 2320 seem like the obvious next stop.

I’ll be watching 1380 on the S&P 500 this week:

Here’s the Dow which seems like it just has to go retest 12,000:

The Russell 2000 is heading back to the bottom of its range:

No changes