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Point & Go Figure: DJIA, NDX, Microsoft




Point & Go Figure Market Overview:
The NYSE Percent Above 50-day Moving Average Indicator remains in Os, now below 50% through Tuesday and the Nasdaq Percent Above 50-day Moving Average Indicator is also in Os and below 50%, though it showed a negative divergence yesterday finishing up on the day, indicative of a near-term bounce possibly forthcoming.

The High-Low Indices for the NYSE and Nasdaq are both in Os.

The longer-term bullish percents for the NYSE and Nasdaq Composite are both still in Xs, but barely clinging to those columns while the larger pattern of lower highs remains intact, a significant long-term bearish divergence.

The more narrow S&P 500 and Nasdaq-100 Bullish Percents both are negative, each in a column of Os.

Charts of Interest:

Dow Jones Industrial Average (25x3 scale)
(Chart courtesy
The chart of the Dow has broken a triple bottom, but remains above trendline support and until 10,275 is printed the pattern could become a bear trap with an immediate reversal up to 10,375. Regardless, given the high-risk condition of the technical indicators, a bear trap would likely provide Hoofy only a temporary reprieve. Lower prices are expected.

Nasdaq-100 (10x3 scale)
(Chart courtesy
The NDX has already violated its trendline and this 10x3 scale shows very important spread quadruple bottom support was recently violated as well.

Nasdaq-100 (20x3 scale)
(Chart courtesy
Dorsey Wright)
Meanwhile, a longer-term chart of the NDX shows this index sitting at a serious level with 1600 an important trendline violation that dates to the October 2002 cyclical uptrend line.

What is interesting to note, however, are the similar violations that occurred in August 2004 and April 2005. Both were trend breaks that were immediately reversed, precisely why we rely on DeMark indicators and not on PnF charts for timing.

Will this time be different?

(Chart courtesy Thomson Financial)
To see whether this time might, in fact, be different, we want to look at the NDX with DeMark indicators overlayed on two different time scales. The first, weekly chart 1, shows technical evidence that just as the PnF chart in August 2004 looked most bearish, the index was poised to react to the 1302 level, a TDST line based on the first bar of the 9 sell setup for the week of October 3, 2003.

Weekly chart 2 shows the completed TD-Sequential buy setup 9 just as the PnF chart looked most bearish in April 2005. Both of these weekly charts provided strong evidence that the trend was most certainly not likely to be our friend at those points.

But is this time different? A look at the longer-term monthly chart suggests that this time might very well be different. Note the sell signal registered on a monthly basis in 2005 and and a 9 setup registered in March, forming a 9-13-9 sell pattern.

Microsoft (MSFT)
(Chart courtesy
Dorsey Wright)
MSFT has given a sell signal for the first time since July 2002.

No positions in stocks mentioned.

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