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Technical Analysis charts of RTH $SML $OEX Futures $SPX $XAU
Tuesday, February 14, 2006


Nightly and Pre market update


The Dow Jones Industrial Average (INDU)
On the 60 minute chart, the Dow is now in the breakout of the right side of the diamond pattern. It is in a bullish trend reversal. Today was a big upside reversal and it has been a long time since we have had a pattern this bullish. However, the Dow is not leading the market. The following indexes are leading the market higher: the banking, brokerage, retail and transportation indexes.


The S&P 600 Small Cap Index (SML)
Interestingly enough the large caps are not leading the way up but rather the small and mid cap indexes. This is where the strength of the market lies. In terms of the small cap index, there is no bearish divergence in the RSI or PPO. We have an outside bullish reversal. We have expanding volume on the rally up and contracting volume on the pullback. Despite being over extended the SML remains in a bullish trend reversal.

The Retail Holders ETF (RTH)
This sector has been up every single day for a week. We have a daily bullish trend today, and so now it is bullish in all time frames (weekly and Monthly and now daily). It is currently in a neutral stance since it is in a symmetrical triangle pattern.

The Gold and Silver Index - Philadelphia (XAU)
The XAU is currently in a correction off the highs. It is in a bearish trend reversal on the daily and it is a wave 3 to 4 correction. Despite this medium term bearishness it should hold its uptrend line around 128 or so. This consolidation may last several weeks or so, yet it is typical of a bull market type correction. Longer term trend remains bullish.

Energy Prices- Goldman Sachs Commodity Index (GJX)
We have now returned to July 2005 levels on this chart. and we have broken the first weekly uptrend line. Oil is stagnating, but Unleaded gasoline has not seen these lows in 9 months and natural gas has been chopped in half. This whole sector is mixed. Crude OIL, Brent Crude Oil, Unleaded Gas, Heating Oil, Gas Oil, and Natural Gas are looking bearish and we are in a correction.

Caterpillar (CAT)
This pattern is ruthless it will go farther and higher than anyone thinks. It is in a reverse symmetrical triangle. This is just an example of a continuation pattern. It is a reminder that RST patterns can be painful especially if you are short.


Cardinal Rules and Elliott Wave
1. If you forget everything always remember this: Any thing retraces more than 72% of an impulse wave up or down, it then automatically becomes corrective and then is no longer an impulsive wave. Please refer to the DOW futures chart. The Dow and SPX have passed their 72% retracement levels, and therefore the moves down were sideways corrective. Therefore, we have to maintain a bullish bias.

Stock Scan Tutorial


  • HOW WALL STREET USES THOUGHT- WEAPONS OF MANIPULATION From time to time, I see an article which is of particular interest, and I want to share it with you. The following is from Paul Ferrell and appeared in Investors Business Daily. In future, I will have much more to say about Ray Kurzweil and his theories re: Singularity, particularly as they apply to accelerating change and its implications for traders.
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DOW
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$OEX
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$SML
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RTH
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$XAU
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ENERGY INDEX
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CAT
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ES (SP500 FUTURES)
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YM (DOW FUTURES)
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DOW FUTURES

Chart Patterns