Weekend Analysis for Sat June 14th 2008 
Sat June 14th 2008
60's Win Out...
by Jack Steiman
| S | M | T | W | T | F | S | | 1 | 2 | 3 | 4 | 5 |
6 | 7 |
| 8 | 9 | 10 | 11 | 12 | 13 |
14 |
| 15 | 16 | 17 | 18 | 19 |
20 | 21 |
| 22 | 23 | 24 | 25 | 26 |
27 | 28 |
| 29 | 30 | |
Last night we made mention of those 60 minute divergences and just how strong they looked. They were saying that it was probable that the market was about to ensue on a rally that had a chance to be significant. The masses, including yours truly, were incorrect in waiting for the Cpi report to come out today before buying. The Cpi wasn't very good but it wasn't worse than expected and the market futures ramped once the news came out. We gapped up and blasted off shortly thereafter. Once we were two hours in, the markets slowly but surely started to erode. We took out 2432 and 2439 on the way up which was so positive, only to start losing them again late in the day. Things looked bad when suddenly, and out of nowhere, the markets ramped hard in to the close. Fabulous late action which is also when the smart money buys or sells. They made their intentions quite clear in the last 20 minutes today. Bulls and bears alike, take notice. They allowed the Nas to recapture both the lost trend line breakdown and the 50 day ema now at 2439.60. Outstanding bullish late day action.
What don't we have yet? What is still missing from an all out buy signal? The type of signal that says 100% long? Only one thing but it's not insignificant. We could use a nice strong positive divergence on the daily charts. This move up is not finished. The next time we pull back, if the Macd's are reflexive, it'll be time for a 100% invested position. The possibility is there. It's starting to set up as we speak but that'll need time. One more pullback after this move up is over and we'll have our answer. Some additional patience will be required. It's getting exciting but again, we're not there yet so easy does it please.
When a market is under duress such as we saw occur when we lost the trend line and the 50 day on the Nas, the side under duress has little time to get back what it lost. The longer an index stays below critical support, the braver the opposing side will become. It gets harder and harder to take back what was lost. The bulls didn't wait long to take things back. A powerful move that has to be respected by the bears. They had just taken control but lost it so quickly they can't be happy. Bottom line about today is it gives the bulls real hope that the final bottom is being made. It's still unclear so again, easy does it. Hope now is real for that to become a reality though. Remember this, no on believes in this market. it's hated and that's a real positive.
The banks remain under severe duress and that needs to reverse as well for the markets to get rocking higher with force. There is also no question that technology is the place to be and not the financial's. Don't try to catch that falling knife until it has a severe duress day that reverses on big volume. That's when the bottom will be in. I expect the Nas to outperform from here on in. Your focus overall will be best served in the land of tech. The appetite for growth stocks is coming back in a big way while the lower p/e stocks, the so called safer stocks, are now taking a back seat. This should continue for quite some time to come.
The good thing for the bulls, when studying the charts, is that many solid stocks are setting up in strong bases with their Macd's having unwound which is telling in that it suggests these stocks are readying themselves for a strong move up and out. It doesn't mean it'll all happen in one moment but it does suggest that things are starting to look better for many individual stocks and thus also the market. The bases are also rather large which means if these stocks can take out their trend lines to the up side they measure quite a bit higher. Plenty of fuel in the patterns and also plenty of fuel from the shorts who can't get enough of shorting these days. While never a guarantee, you have to like, if you're bullish, the way these patterns are setting up near term.
So the market has made the initial move off those 60's. We should continue higher near term. There is some resistance at 2465 Nas and 12,370 on the Dow. 12,370 is the top of the wedge on the 60 minute chart. if that gets taken out that would be very bullish. Some selling off that area should be expected but you never know. If that selling does occur, or whenever the next bout of selling comes, that'll give those daily's their chance to positively diverge. Let's see how things set up in the days ahead.
Have a great weekend. Enjoy kids if you get the chance.
peace
Jack
Former columnist for TheStreet.com, Jack Steiman is renowned for calling major shifts in the market, including the market top in October 2007.
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