Technical Analysis of Financial Markets

Wednesday, August 16, 2006

AMEX Oil Index (XOI) - Negative Divergence

During early Sep and late Oct 2005, the MACD indictor formed a negative divergence against price action for nearly 2 months; subsequently the AMEX Oil Index plunged. The same negative divergence of MACD against price action on a similar 2 month scale is currently in progress beginning early July 2006. A break of support at 1180/1160 may signal a move lower on a similar scale as during Oct 2005 bringing price action down to the lower end of the trading range; oil stocks may be poised to fall.

Saturday, August 12, 2006

Exxon Mobil Corp. (XOM)

ExxonMobil recently hit an all-time high of over $70 but has been unable to close at or above that level. A 2-month uptrend driven by record $10US billion earnings profit news due to record oil prices seems intact. However indictors such as the RSI are signalling well overbought conditions, and overbought stochastics have crossed attempting to turn lower. Short-sell on break of the uptrend for a lower-risk entry. Fibonacci retracement levels of the trend may serve as possible support levels. Stop-loss: break & close above $70. Deutsche Bank has a "buy" rating (July 28th) on ExxonMobil with a target price raised from $67 to $75.

Thursday, August 10, 2006

Cisco Systems, Inc (CSCO)

Positive earnings news from Cisco sent the stock surging 15%; however price action remained below $20 and OBV is yet to show signs of fresh buying interest. The $20 level has historically served as support and resistance. Should $20 act as resistance again, current market conditions and profit-taking may drive prices lower. The 200-moving average has crossed above the 50-day moving average; since long-term indicators carry more weight, this may indicate a bearish signal.

Tuesday, August 08, 2006

Dow Jones - Day before the Fed

Today penetrated a 13-day uptrend but managed to close the session resting on the trendline. OBV has been declining since the uptrend began implying a divergence. Stochastics are signalling overbought conditions and have crossed looking to turn lower. Technically, the Dow seems to be weakening and ready to end the current uptrend. However, the Fed’s decision on interest rates tomorrow will of course steer the market.

Friday, August 04, 2006

Gold & Copper - Metals Symmetrical Triangle

After a parabolic rise in commodities, metals copper and gold seem to be consolidating into a Symmetrical Triangle formation. Breakout usually favours the direction of the previous price trend (i.e. upwards); however, the breakout can occur in either direction - trade in the direction of breakout. Gold can be traded using the streetTRACKS Gold ETF listed on the NYSE under symbol GLD. Is there a copper ETF available?

Apple Computer, Inc (AAPL)

The recent uptrend in Apple has been broken due to a sell-off on news that it will probably reduce some of the profits it has posted since 2002 because it improperly accounted for employee stock options. With RSI and stochastics signaling overbought conditions, a short-sell trade to Fibonacci retracement support levels may be possible. The 50% Fibonacci retracement level at $60 also serves as gap support. Stop-loss close above $70.

Thursday, August 03, 2006

Bayer AG (BAY)

German drug manufacturer Bayer has recently hit a new 52-week high and may be subject to some profit-taking; overbought stochastics have crossed and may signal lower prices. The recent 2-month uptrend has today been breached. Current prices may provide entry to a possible short position targeting Fibonacci retracement levels. Stop-loss close above $50.

Wednesday, August 02, 2006

Pfizer, Inc (PFE)

Jeffrey Kindler takes over as Pfizer’s CEO from Henry McKinnell and the stock stages a mini-rally. The previous trading session technically broke and closed below the uptrend support of the mini-rally and with RSI overbought, and overbought stochastics crossing looking to turn lower, now may be a good entry for a short position. Watch Fibonacci retracement levels for targets. Stop-loss if close above $27.