REVIEWING LAST WEEK'S OBSERVATIONS
GUEST COLUMNIST - CHIP ANDERSON... John is travelling today and so Chip Anderson, President of StockCharts.com, is filling in. John should resume his commentary on Wednesday.
I thought it would be constructive to go back a review John's observations over the course of the past week and see what can be learned from them. Reviewing your past work is something that all serious market technicians do constantly.
MONDAY - JUNE 14th... John started last week worried that the markets were overbought and would react poorly to the upcoming inflation reports.
"The QQQ is heading down for a test of moving average and chart support in the 36.00 35.75 region. We'll be watching the volume very closely during this pullback. Volume was disappointingly light during the recent market rebound. The last thing we want to see now is heavier trading on the downside."
Since Monday, the QQQ rallied but then faded on even lighter volume and is now just above the support level at 36 that John mentioned. John also discussed Consumer Staples, Interest Rates and the SOX in his Monday update.
Chart 1
TUESDAY, JUNE 15th... Tuesday saw the release of a tame inflation report that helped the market rally however John remained concerned about the market's lack of volume.
We'll be watching the volume today so see if it matches the impressive price gains. That hasn't been the case over the past few weeks.
John also highlighted Microsoft which had moved above its 200-day average in impressive fashion. He rounded out Tuesday's report with a look at the ETFs for the S&P 500 and the Dow as well as a strong transporation stock, CNF. In a second update, John reiterated his concern about volume:
Today's volume was also the heaviest in more than two weeks. We need to see a few more days like that.
Chart 2
WEDNESDAY, JUNE 16th... On a mixed market day, John highlighted the strongest sector - Energy - and then drilled down into the strongest industries within that sector - Natural Gas and Oil Services. One of the many charts in Wednesday's update shows Schlumberger breaking out above the support level at 61 where it has remained.
Chart 3
THURSDAY, JUNE 17th... Towards the end of Thursday's update, John returned to his theme for the week on Thursday - Volume picked up a bit from yesterday, but was still light. He highlighted Jabil Circuits as a leading culprit for the market's weakness Thursday.
Chart 4
FRIDAY, JUNE 18th... On Friday, John turned his attention to the Intermarket picture and saw that the US Dollar was weakening and commodity prices are poised to head higher. He followed that observation with a look at most of the big-name commodity stocks including the decade-long breakout by Nucor.
Chart 5
SO WHAT HAVE WE LEARNED?... By reviewing John's work frequently, you will start to see "patterns" in John's thinking that can help you become a MUCH better investor. Patterns like "Price movements without volume are often misleading" and "Drill down from strongest sectors to strongest stocks" and "Periodically review the Intermarket picture." I strongly believe that subscribers who take the time to spot these larger messages are getting much more value out of John's work that those that just blast through each message once.
- Chip Anderson
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