German DAX Composite (DAX)- Daily Chart
Like the CAC 40, the DAX rally has been impressive ever since it placed it's lows in November at 4762.80. If you remember the primary pattern of the DAX is a Continuation RST. The DAX is up 1200 points from the lows, which is also after the DAX broke out of the Reverse symmetrical triangle. The DAX has been trading in a parabolic uptrend channel and consistently holding it's moving averages and the uptrend line. The DAX finally crossed 6000 this week. However, please keep in mind that this is not a pattern. I would like you to focus on the 72% retracement level. That number is in 6400 area. If that number is taken out , the DAX will head higher. However, in the very short term, the DAX now has to take out resistance at 6108.70 for confirmation of a move higher. It appears that the DAX is forming a bull flag. Indicators and oscillators are in a full blown bullish trend reversal, but the PPO is showing slight bearish divergence.
The S&P 600 Small Cap Index (SML)- Daily Chart
The daily 6 month chart of the SML illustrates that it has been trading in an uptrend channel since it placed it's lows in October 2005 at 322.92. As always, the general rule of thumb is, that higher highs are bullish. However, the SML just made new 52 week highs at 402.14, and is now pulling back to form a bull flag. As long as the SML stays within this bullish channel, it will perform well. Indicators and oscillators are moving up along with price. There is light negative divergence in the PPO, but it is nothing to be concerned about.
The Semiconductor Index (SOX)- Monthly Chart
The monthly chart of the SOX shows that it is forming a large bullish ABC pattern. It is also trading within an Andrews Pitch Fork. The SOX has never been broken. The moving averages are holding up nicely in a bullish fan, and we are just waiting on a reversal to the upside. Indicators and oscillators are in a bullish trend reversal. It is the first time in a while that the SOX looks decent, even though the sector has been underperforming. The first price target is 649.80 which is the 38.2% retracement level. ( This is not a recommendation to buy laggards such as INTC.)
The Dow Jones Utility Average (UTIL)- Weekly Chart
The weekly UTIL chart illustrates that it is in a wave 3 to 4 / ABC pullback. The Utility sector is the most interest rate sensitive sector. One has to ask the following: Why has the UTIL been rallying and out performing every major index this year whilst market pundits are calling for a top? Meanwhile, it keeps pushing higher and out performs all other indexes. The Top is in only when the UTIL makes new all time highs along with the TRAN and the INDU. Then all the Dow theory experts will declare a bull market is in place. The exact opposite will be true, and the top will be in. I will let you know. The Aroon just had a bearish cross, and indicators and oscillators are still bearish, but look to be bottoming.
Apple Computer, Inc. (AAPL) - Daily Chart
The daily chart of AAPL shows that it has completed a wave (3) to (4) pull back. AAPL has broken out of a continuation falling wedge pattern. It never overlapped wave 1 to 2, and that is bullish. Furthermore, AAPL put in it's lows at $57.67 it then broke out of the wedge and ran up to $72.05 on strong volume. AAPL is now pulling back to test the top of wedge line on light volume. APPL looks like it is getting ready to move back up.
Autodesk, Inc. (ADSK) - Daily Chart
I want to add ADSK to the portfolio table because I want to keep new and fresh stocks in he portfolio table for the short and intermediate term. Now short term trades require catalysts such as news or fundamental catalysts, unless we are in a market that has a technical catalyst. A technical catalyst can be converging trendlines, confluence, retracement areas, previous resistance and support and so on. Since the market has rallied so hard off of the recent lows last week and we have now pulled back on light volume, we now need to look at stocks on this pullback. ADSK looks good here. It has broken out of the downtrend channel. The PPO is strong and there is no bearish divergence. It will exaggerate the move on the up days of the market, and vice versa. If you do not have ADBE I would recommend ADSK in the software sector.
$DAX
$SML
$SOX
$UTIL
AAPL
ADSK
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