Thursday, February 27, 2014

checking the leaders

Here are daily charts of three of the current leaders of this bull market. I last commented on these three stocks here. Before commenting on them now I want to make a few remarks about the general market trend.

The Dow, the S&P 500 and the New York Stock Exchange advance-decline line are currently all above their 50 day moving averages. This tells me that the bull market trend is still strong and intact. The Dow, however, has yet to make a new bull market high and is closest of the three indicators to its 50 day moving average which currently stands at 16,141. The S&P is a little stronger, having made a marginal new high for the bull market. Its 50 day average is at 1820. The NYSE advance-decline line has made a new bull market high by a wide margin and is nowhere near its 50 day average.

Any significant weakness going forward from current levels would put the Dow and the S&P below their 50 day moving averages. Such a configuration would be bearish, especially since the Dow would then be coming down from a lower top. That would identify this lower top as point 27 in Lindsay's three peaks and a domed house. The implication would be that the Dow and the S&P are headed to or below their October 2013 low points.

At the moment I don't think such a bearish development is in the cards. The advancing issues oscillators on my chart page are all coming down from very high levels and in a bull market that generally means that the associated top in the averages is still weeks ahead of us. I still think the Dow will make a new high for this bull market and that the S&P will trade above 1900 before any big break materializes.

Turning to the charts above this post you can see that Facebook and Visa are still in strong up trends.

Facebook has nearly reached my 73 target and the next development will probably be a drop of 10-12 points which would match the size of the two preceding reactions and bring FB down to its support at its January top and put it a little below its 50 day moving average.As long as FB holds that support another up leg can be expected to follow.

Visa is continuing its pattern of 20-25 point reactions and I am sticking with my 270 upside target.

Twitter reached the lower edge of my upside target zone of 75-78 but the subsequent drop broke the two support levels I cited in my last post (linked to above). You can see that TWTR has dropped below its rising 50 day moving average which itself is starting to flatten out. There have been a pair of 12 point rallies on the way down from 75 and a rally that big from 50 would put TWTR at 62. For the moment I expect resistance at 62 to hold and if it does the next step down will be to 40.

No comments: