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Point & Go Figure: Midweek Market Review



Short-term Overview:
The percent of stocks above their 50-day moving average charts remain in Os (defensive posture) and, despite yesterday's move higher, are not close to reversals back to Xs. Moreover, they remain closer to overbought levels (70% and above) than oversold levels (30% and below).

The High-Low indicators remain defensive as well. The NYSE and Nasdaq High-Low charts were both up yesterday, according to data from Investor's Intelligence, though nowhere close to a reversal to Xs.

Intermediate Overview:
The intermediate picture remains slightly mixed with the percent of stocks above their 150-day moving average for the NYSE negative (and continuing to make lower highs) while the Nasdaq remains positive (currently in Xs). It should be noted that, like the NYSE, this indicator too is continuing to make lower highs dating back to its ultimate peak in September 2003.

Long-term Overview:
While the bullish percent charts for the NYSE and Nasdaq remain in Xs, the pattern of lower highs (meaning diminishing breadth and participation) combined with their relative high risk level, continues to suggest we are closer to a conclusion to the cyclical rally that began in October 2002, than to the beginning of an important new leg higher.

Sector Watch:
Positive technical action continues to take place in the Chemicals sector. Of special interest to me is the potential for a paired trade with Dow Chemical (DOW) (beta 1.08) as the technically weak side and possibly Chemtura Corporation (CEM) (beta 1.34) on the technically strong side.

Dow Chemical (DOW)

Chemtura Corporation (CEM)

Charts of Interest:

Arena Resources (ARD)

Grant Prideco (GRP)


Alkermes Incorporated (ALKS)

S&P 500

Dow Jones Industrial Average

Russell 2000

If you would like a chart reviewed, let me know here.

I have added text and illustrations to the charts where necessary.

Charts courtesy Dorsey, Wright & Associates.

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No positions in stocks mentioned.

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