December 17, 2007 Stock Market Recap

Another ugly day as the indices finally took out the early December lows. The next levels of interest are the December uptrends, which also happen to be the necklines of head & shoulder patterns on the indices (excluding the Russell 2000). The Nasdaq is sitting right on that trendline but the S&P 500 and Dow still have some room.

Speaking of the Dow, I’m always harping on the fact that you can’t trust the opening price on the charts of indices containing NYSE stocks because of their staggered opens. So I was very surprised to see this in tonight’s Worden Report:

Three of the four Major Averages gapped to the downside today. This is very unusual for averages, which are usually kept tame by internal disagreements. The only Major that didn’t gap down was the Dow, which might as well have, since its opening and high price for today was virtually equal to yesterday’s close.

Worden, the keeper of all this stock data, should know better. If he wasn’t around this morning to see the Dow futures below fair value then he could easily look at DIA to see how the index *really* opened. It most certainly did gap down. In fact, it gapped right across its 200-day moving average. Here’s the DIA chart:

The S&P appears to be headed for the November lows and/or the August trendline:

The Naz just broke its 200-day moving average for the third time this year. The previous two breaks were buying opportunities. Will this one be as well?

I should probably mention that T2108 broke that important 20 level today. It’s at 19.93 but could easily test it’s lows from earlier this year of 7 and 12. As I always say at these levels, while I might not want to be a buyer I sure as heck don’t want to be initiating shorts here, and would have my finger on the ‘buy to cover’ button if I was already short.

Trend Table

Not a single “Up” on the table now…

Trend Nasdaq S&P 500 Russell 2000
Primary Lat(-) Down(-) Down
Intermediate Down Down Down
Short-term Down Down Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.


  1. Posted by Dr. Duru on December 18, 2007 at 1:03 am

    I just noticed T2108 is already back below the magic 20 line. Amazing it took less than a month from the bounce and strong rally from the last time. From my quick scan of things, this kind of bounce, rally, and return has not been seen in the past several years. Perhaps this is true bear market action? 😮

  2. Posted by Declan Fallon on December 18, 2007 at 8:24 am

    I took a look at the bullish percents for the Dow, S&P and Naz compared to the closing price for these indices.

    Based on the closing price there is perhaps a little room to the downside for the Nasdaq, with key support at 1,407 for the S&P. But certainly not a place to be running short.


  3. Posted by Babak on December 18, 2007 at 8:34 pm

    Hmm… the % of stocks above their 50 day moving average in contrast failed to break through the magical 20% level.

    But other indicators I watch, like the new high-new low indicator are flagging an inflection point now.

  4. Posted by Charles on December 19, 2007 at 6:05 am

    In contrast, I did an analysis of % of stocks above their 40 day SMA for the S&P Large Caps, S&P Mid Caps, S&P Small Caps and the NASDAQ 100.

    The results for 12/17/07 are:

    Large Caps: 31%
    Mid Caps: 26%
    Small Caps: 20%
    NASDAQ100: 22%