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Point & Go Figure: SPX, HGX, SOX, AAPL, JPM, Wheat, Cotton




Last night around 11 p.m. I had an epiphany of sorts, which is a rather strong cocktail made with Campari, rum and lime juice. While enjoying my epiphany, my first thought, naturally, was to never again do it without the fez on. Then I realized that this important decision was heavily influenced by a Steely Dan song that happened to be playing in the background, so I went to bed. But not before looking at a number of charts and weighing whether the S&P 500 has yet reached levels from which some relief can enter the market.

Technically, the bullish percent index for the S&P 500 is still at 50% and as of yesterday generated a lower low on the chart for the first time since July 2004. That does not bode well for the longer-term context. Nevertheless, the percent of stocks in the SPX above their 50-day moving average is now getting to levels similar to April of this year when a significant rally occurred.

The difference now compared to April, however, is that such a forthcoming rebound will take place within a context far more negative than this past spring. That suggests to me that any oversold rally that does occur will present an opportunity to sell SPX. That is how I intend to position myself. In other words, the SPX is "due" for a rally, but this rally will take place without the fez on... if you know what I mean.

Below are some additional charts Minyans asked have me to review. If you would like a chart reviewed, let me know by clicking here.

All charts courtesy Dorsey Wright.

PHLX Housing Sector (HGX)
The HGX has already violated the cyclical uptrend line from the October 2002 lows. The index is getting oversold here, but the incomplete downside objective based on the recent move lower is 396, so far. Any counter-trend bounces should be contained by 504, then 516 if necessary.

PHLX Semiconductor Sector (SOX)
The SOX rebounded in gaudy impressive fashion late yesterday afternoon, but as this 5x3 chart shows, the rebound has done little to improve the sector index on a technical basis. Resistance from here is 455, then 475-480.

Apple Computer, Inc. (AAPL)
Shares of AAPL yesterday rebounded quickly from the sell signal recently generated with the move below 50, but face important resistance overhead and are close to some potential DeMark TD-Sequential exhaustion setups. This stock has seen a number of clustered DeMark TD-Sequentials since April, but each time has found enough energy to recover. For the first time, however, the PnF context is supportive of trend exhaustion.

J.P. Morgan Chase & Co. (JPM)
JPM has broken a spread triple bottom with the move below 33. Resistance for any counter-trend moves higher will be 33.5, then 35.

Cotton Dec 05 (CT/Z5)
December Cotton broke out a couple of weeks ago with the move above 52.50. Support from here is at 55, with the first sell signal now coming below 52.50 while the price target is 61.

Wheat Dec 05 (W/Z5)
December Wheat is forming a potential bullish triangle here. A move above 350 would confirm the upside break. The price count is 364.

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Position in Dec. Wheat

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