September Outlook

One thing to keep watch closely over the next week or two is the Volatility Index (VXO) which is very close to nearing its 52 week low around the 10 level. In the past when the VXO has dropped to around 10 (point A) this has been followed by some type of correction (points B to C) in the S&P 500. Currently the S&P 500 is only about 14 points away from its early May high near 1325 and if it's able to rise back to its May high in the near term, and the VXO drops back to around 10, then this will likely be followed by a correction in the major averages at some point in September.


You can read our complete market analysis at
http://www.amateur-investor.net/Weekend_Market_Analysis_Sep_2_06.htm

Weekly Stock Market Analysis 8/26/06

The Nasdaq has developed a trading range between its 200 Day EMA (blue line) near 2175 and its 50 Day EMA (green line) near 2120. We will likely see the Nasdaq break out of this trading range before much longer. If the Nasdaq can rise above its 200 Day EMA near 2175 then I would expect its next area of upside resistance would occur in the 2195 to 2235 range. The 2195 area (point A) corresponds to the Nasdaq's 50% Retracement Level (calculated from the April high to the July low) and is also where it stalled out at in early July. Furthermore the 2235 area (point B) corresponds to the Nasdaq's 61.8% Retracement Level and is also where it stalled out at in early June after attempting to rally from oversold conditions. Meanwhile if the Nasdaq were to break below its 50 Day EMA near 2120 then I would expect to see an eventual retest of the mid July low near 2010.

You can read our complete market analysis at

http://www.amateur-investor.net/Weekend_Market_Analysis_Aug_26_06.htm

Stock Market Analysis for 8/19/06

Although we did see an impressive rally this week one thing to keep a close eye on is the Volatility Index (VIX). The VIX is quickly approaching a level (black line) that has eventually signaled a nearing sell off during the past year below a value of 11. If the VIX continues to drop and falls below the 11 level within the next week or so this could be a signal of a nearing sell off. Also the last time the VIX rose rapidly (points A to B) this was then followed by a quick drop (points B to C) back in June which was then followed by a substantial sell off in the S&P 500 (points D to E). Thus keep a close watch on the VIX over the next week or so because if it drops below 11 this could be a signal of a nearing sell off as we move into the month of September. Also keep in mind historically September has been the worst performing month for the market by a long shot with the Dow being up only 37% of the time since 1900.

You can read our complete market analysis at

http://www.amateur-investor.net/Weekend_Market_Analysis_Aug_19_06.htm

Stock Market Analysis for 8/12/06

The S&P 500 is exhibiting a potential Double Bottom pattern although the 2nd bottom was not as low as the 1st bottom so it's not a classic Double Bottom pattern from a technical point of view. So far the S&P 500 has held support at its 200 Day EMA (green line) just above 1260 and if it's going to maintain its Double Bottom pattern it will need to continue to do so next week. If the S&P 500 were to break below the 1260 level then it may eventually retest the 1220 to 1225 range which corresponds to the lows made in mid June (1220)and mid July (1225).

You can read our complete market analysis at

http://www.amateur-investor.net/Weekend_Market_Analysis_Aug_12_06.htm

Stock Market Analysis for August 6th

There is a Federal Reserve meeting next week so expect an increase in daily volatility in the major averages. Meanwhile if we take a look at a longer term chart of the S&P 500 so far it's acting similar to what occurred in the Spring and Summer of 2004. Back in 2004 the S&P 500 peaked in March and then developed a similar potential Double Bottom pattern. However the S&P 500 then stalled out in June which was eventually followed by more selling pressure before the real bottom occurred in August (points A to B). Thus it will be interesting to see if the S&P 500 takes a similar path in the weeks ahead.













Our complete Stock Market Analysis can be found at
http://www.amateur-investors.com/Weekend_Market_Analysis_Aug_5_06.htm

Weekend Market Analysis for July 29th

Since early May the Nasdaq has been making a series of lower lows (points L) as it has remained in a steady downtrend. Also you may notice that the previous two bounces from oversold conditions ended up stalling either at the Nasdaq's 50 Day EMA (blue line) or 200 Day EMA (green line). If the Nasdaq is able to rally back to its 50 Day EMA which is currently near 2130 it will be interesting to see what happens this time around as there are two possibilities. Either the Nasdaq will stall out at its 50 Day EMA and then come under more selling pressure with an eventual retest of its low made just a few weeks ago near 2010 or it will rise above its 50 Day EMA leading to a move up to its 200 Day EMA near 2190.



You can read our complete market analysis for July 29th at
http://www.amateur-investors.com/Weekend_Market_Analysis_July_29_06.htm

Weekend Analysis for July 22, 2006

Historically most major market bottoms have occurred in the late Fall so we still may have a ways to go before a true bottom occurs. It's possible that the Nasdaq will eventually drop back to one of its its longer term Retracement Levels (38.2%, 50% or 61.8%) calculated from the Fall 2002 low before we see a major bottom occur. Currently the 38.2% Retracement Level is around 1900 which also corresponds to the April 2005 low (point A). Meanwhile the 50% Retracement Level is around 1750 which is very close to the August low of 2004 (point B). Finally the worst case scenario would be for the Nasdaq to drop back to its 61.8% Retreacement Level which is at 1600. Meanwhile until a true bottom is reached look for any oversold rally to encounter strong resistance at the Nasdaq's 40 Weekly EMA (blue line) which is currently around 2200.















You can read our complete market analysis at http://www.amateur-investor.net/Weekend_Market_Analysis_July_22_06.htm