I have a few random comments about the market action today

1)  I mentioned last post, that the market was overbought and it needs to work off this condition.  The NASDAQ McClellan Oscillator closed down 3 points to a +68.  I also said last night -

The best case scenario would be to move sideways for a week.  That way we could keep the charts intact and work off some of this overbought condition.

If we could get a week or two more of this type of I action, it would be ideal.  So far, so good!

2)  I am betting that IBD will call today a distribution day.  This would be 5 distribution days for the DJIA, three for the NASDAQ, and four for the S&P500.  This might be an end to the follow through day started on December 11th.

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The market is in the midst of a mini-move up.  Let’s take a look at some indicators to get a better feel of where the market is.  After the light volume rallies we saw during the holiday weeks, it looks as if the market is extremely overbought.  The NASDAQ McClellan oscillator closed up 19 points on Friday to finish at a +71.  This is an area where the market usually turns down and works off some of the overbought conditions.

The DJIA, NASDAQ, and S&P500 have closed and held their 50 day moving averages for 2 sessions.  Here is a note from IBD.

The day’s price gains by the broad indexes propelled them well above their 50-day moving averages. That’s an encouraging sign, given that that line had offered stern resistance going back several months.

I want to see this hold for 2 to 3 more sessions before I give out some stock picks.  I am very encouraged by the market’s action, but I am very cautious right here.  The best case scenario would be to move sideways for a week.  That way we could keep the charts intact and work off some of this overbought condition.

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As we close 2008 and get ready to ring in the New Year, I thought that in today’s abbreviated WrapUp I would point out a few important technical markers for the various markets. While the trading action in the stock market has been lack luster of late, with low volume dominating the end of year trade, the overall chart configuration for the S&P still has at least some near term promise. As I see it, key resistance for the S&P is well defined at the 915 to 920 area and any move above that zone would be a recipe for higher prices in the early going of 2009. Mind you, I am still very cautious with regard to the stock market as the outlook for the first half of 2009 is bound to be one of continued turmoil and a down market. Yet, I believe that the counter trend rally that began in late November could possibly extend itself into the early to middle portion of January.

Enjoy the holiday!

Happy New Year readers, from everyone at BigGainsHunters.

Enjoy the holiday, we are!

The 2008 trading year is drawing to a close.  I hope this blog has helped you to side-step this horrible year in the market.  2008 will go down in history as one of the worst market periods ever.  Year to date, the DJIA is down ~35%, the NASDAQ is down ~42%, and the S&P500 is down ~40%.  Remember in order to get back to breakeven on a 40% decline, you will need a 66% increase.  That is just to get back to breakeven.

I mentioned in my last post that the market might edge higher into the end of the year.

Stocks could edge higher in quiet sessions throughout next week.

This could be some year-end mark ups and window dressing for year end.  The DJIA, NASDAQ, and S&P500 all closed right on their 50 day moving averages.  There was a nice mark up in the last 20 minutes of today’s trading session.

There is one stock that has caught my eye as of late.  (POT: 83.87 +1.25) has a sloppy looking inverse head-and-shoulders pattern.  This stock has also broke above its 50 day moving average ($69.73).  The stock is really tightening up in this area and volume patterns have been good.  Please put this one on the radar - I will highlight this stock over the weekend.