| Technical Analysis Updates $SPX $INDU $RLX RTH BBH $SML |
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| Saturday, March 18, 2006 |
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Weekend Update- SPX,INDU,RLX & BBH
The S&P 500 Large Cap Index (SPX) - Weekly chart
Today I would like to discuss the current 1334 price target that I have for the SPX. I will illustrate why I have this price target by analyzing the weekly chart.
I have been focusing on the 1334 area as price target, because that number represents the Fibonacci 72% retracement level from the year 2000 highs on the weekly chart. Remember that any index/stock that retraces more than 72% of an impulse wave up or down automatically makes it become a corrective wave. The 1334 area is the 72% retracement level and it also represents strong resistance. If the SPX can surpass that 1334 level, it would then negate the entire down move from the highs placed in the year 2000. This would indicate that the move down from 2000-2002 was no longer an impulsive wave down, but rather a corrective wave down implying that the SPX has room to move higher. Before we get to 1334 we do have to pass resistance at 1315.90. This will represent some minor resistance, and the SPX will probably pullback or backtest new support level at 1304.
Dow Jones Industrial Average (INDU) - Monthly chart
My price target for the INDU is 11,350. I will illustrate this by analyzing the monthly chart. First I will discuss support and resistance levels for the INDU. I have this target because 11,350 is the next resistance level. Support is currently at 10,600. Should the INDU surpass 11,350 the next resistance level is at the all time high of 11,750.20? Furthermore the DOW has surpassed the 72% Fibonacci retracement level and we are now at 11,300 which the is 90% retracement level. Therefore, we are headed for 11,350. The INDU has held its moving averages and is consistently moving upwards. On the monthly, you can also see that both the PPO and Williams % are both turning up. Volume is also expanding and the RSI is not even overbought.
The S&P 600 Small Cap Index (SML) - Daily chart
Yesterday the small cap index made new 52 week highs at 390.34. The daily chart remains in its reverse symmetrical triangle (RST). As always, the general rule of thumb is, that higher highs are bullish even though this pattern itself is treacherous. The RSI on the daily chart is heading higher and is at 63.6, the stochastics are up, and the williams% indicator is bullish and trending. It remains to be seen if this pattern will over shoot the upper trend line and turn into a continuation RST. The bottom line is that the SML still has not hit the upper trendline at 400. The small and mid caps are still out performing the broader market which indicates further strength.
The S&P Retail Index (RLX) - Daily chart
In order for the broader market to really rally, we will need the homebuilders, retail and chip stocks to start participating. It looks as if this is beginning to happen. The daily chart of the RLX shows that it is in a bullish ascending triangle pattern. All indicators and oscillators are bullish. Today the RLX is up 0.41% at 481.75, which is only a few points away from it's 52 week highs at 489.34. Retail and Housing stocks have been market laggards. They are now catching bids. Therefore I believe the new portfolio and market themes will be housing, select retail stocks and biopharma.
The Biotech Holders ETF (BBH)- Monthly chart
On the monthly chart of the BBH you can see that it is still in it's 4 month downtrend channel. It is in the process of forming a bull flag. Once it breaks out of its recent down trend channel I would not be surprised if it retests its former high at $238.15. The BBH is the laggard biotech index because AMGN and DNA are still waiting on catching some bids. The BBH will not begin to rally until these two stocks start participating in the move.
$SPX
$SPX FIB RETRACEMENTS
$INDU
$INDU--SAME AS ABOVE BUT CLOSE UP (11,300 IS THE 90% RETRACEMENT)
$SML
$RLX
RTH
BBH
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