Rebound for Stock Indexes

dow0806.gifThe markets made a nice recovery today after another very choppy session. The biggest push up came near the end of the day in a session that ended in almost a mirror image of last Friday. There is a Fed announcement on Tuesday and traders will be looking for a clue in the wording of the statement. Remember when traders used to key off the thickness of Greenspan’s briefcase? It is usually just an excuse for running the market in both directions after the announcement. Sometimes it seems like the markets are dominated by children that should be taking medication. Take a look at the last seven sessions in the Dow, as shown here by the Diamonds ETF. I sure can’t call these swings off the daily charts. Last Friday I put up an intra-day chart to show some order in what looks like chaos on the daily chart. It can only be day traded when bars overlap like that. A tradeable trend will emerge. Best not to get chopped up in the whipsaws.
q0806.gifThe QQQQ (nas 100) doesn’t look like quite so much a mess as the Dow. It is still hugging the uptrending regression curve and lower standard error band channel. There are three tails on the last four bars, highlighted by the magenta circle, indicating price rejection SO FAR of those lower prices. Anything can happen Tuesday with the Fed announcement, but if prices can hold those low spikes and stay above the three day pivot (yellow dots) it is still possible an upmove may emerge from this, or at least a bounce to recover part of the recent drop. Sentiment seems negative enough right now. A close into, or beyond, those low spike will negate that opinion. Cisco reports Tuesday. It’s been a strong stock so might be profit taking selling on the earnings news unless it is unusually positive. Daily chart on Cisco looks like a bullflag with stock holding up very well considering the extent of the overall market sell-off. We’ll see on Tuesday.
Nothing to say about gold. Only a slight retracement after big day last Friday.
I added a trend summary. Look for it in the “Trends” tab at the top.

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