Morning Update - NQ, COMPQ, YM, DAX, NIKK, HWI, XAU, & SMH
NASDAQ 100 Futures update (NQ) - Daily Chart
The NQ futures chart illustrates that it is in an ascending triangle pattern. NQ has held the uptrend line for the past year. Resistance is at 1774 for short term traders. NQ is only 15 points away from multi year highs. However, I want to point out that NQ has not had a down day in a while. I am not anticipating a breakout to new highs this week.
The Nasdaq Composite (COMPQ)- Monthly Chart
On the monthly chart, the COMPQ has been trading in an up trend channel and inching up slowly for the past few months. The COMPQ is bullish above 2280. The COMPQ is bearish below 2240. Last month the COMPQ had a bullish outside reversal on strong volume. Remember, volume precedes price action. Furthermore COMPQ was able to cross 2328 last month which was an important pivot point. All the moving averages are moving up, which is bullish. The PPO and stochastics are coiling and indicators and oscillators are bullish. Although the indicators appear overbought, this means that the monthly trend is bullish and trending. Buyers and sellers are evenly matched. Remember what fails to break down, will break out.
Dow Jones Industrial Average Futures - YM 60 min chart
The YM chart illustrates that it has broken out of the continuation diamond pattern. YM then went on to form a bull flag and is now in the process of forming another bull flag. The stochastics are now showing bullish divergence. The INDU target remains 11350.
German DAX Composite (DAX)- Monthly Chart
The monthly chart of the DAX illustrates what an impressive rally it has had since the middle of 2004. I am bringing up this chart to discuss the subject of indicators being over bought, because this is something that is often misinterpreted. As you can see, all the indicators have been overbought since 2004. When indicators are overbought on the monthly, it indicates that the market / stock is in a strong trending bullish market. Despite the PPO and stochastics being over bought, the DAX The DAX is up 1200 points from the lows, which is also after the DAX broke out of the Reverse symmetrical triangle. The PPO is pointing straight up and there is no signs of cross over or bearish divergence. Furthermore, the DAX finally crossed 6000 this week, which is above the 61.80% retracement level. Now we are waiting on the 72% retracement level, once that is crossed, that will negate the impulse move down from 2001 to 2003. The DAX looks like the utility index 2 years ago which has also been making new all time highs.
The Tokyo Nikkei Average (NIKK)- Monthly Chart
As you can see, the NIKK has also been in a strong uptrend for the past 2 years. This month, the NIKK is up 2.52% at 17489.33. The NIKK broke above the downtrend line this year. As you can see the NIKK has yet to cross the 38.2% level. Indicators are overbought and trending, which is a sign of strength and bullishness.
Computer Hardware Index - AMEX (HWI) Daily Chart
The daily chart illustrates that the HWI is in a triple top ascending symmetrical triangle. Sectors and sub-sectors are on fire. The moving averages are holding up nicely. Notice that there are new highs in the PPO and the RSI along with price. That is B-U-L-L-I-S-H.
The Gold and Silver Index - Philadelphia (XAU) - Daily
The XAU is recently went going through an ABC correction / wave 3 of 4 correction on the daily chart. The recent lows were placed at 121.76. It appears that the precious metals are out performing the stocks at this time. The stocks are underperforming. The best move in the XAU occurred from November 2005 to January 2006 when the metal was weaker. When the metal becomes weaker the XAU and stocks should start performing better.
Semiconductor Holders ETF (SMH) - Daily chart
The SMH daily chart illustrates that it is in a megaphone topping pattern. In any case, resistance remains at $37.80 -$37.90, support is at $36.70. Today, the SMH closed on the intermediate term down trend line. The Aroon just had a bullish cross and the indicators and oscillators are turning bullish. Intel will have to start performing well for the SMH to start moving.
