Next Week, 09-25-2006...

I am a little ahead of schedule and will take the opportunity to post my watch list now, maybe giving more time to look over the candidates. I am also going to try something new. As I've stressed in many other posts, it is important to be trading with the market as ~75% of stocks follow the overall markets. Therefore, I am going to post my thoughts on the SPY daily and weekly charts when possible. I hope it will provide me with a test of my methodology, as I evaluate the SPY the same way I do individual stocks, and may also provide guidance on how to trade candidates during the week. I don't fully believe the same criteria are valid on indices as individual stocks, but the same underlying market psychology may hold true. Time will tell, so enjoy.

Watch List: POM, LNT, CNW, JCI, STJ. There are more 'morning star' patterns in the watch list today. I don't usually trade stars much, but they may be profitable. I'll hold tight stop losses if I do trade them. POM is a nice engulfing while LNT is a doji/morning star that may reverse...

SPY commentary:

The markets do not look great right now in terms of upside potential. In the daily chart, both CCI and slow stochastics are pointing lower, while double bearish engulfings suggest a reversal. There may be some support at 131, the early September high and low on Friday, but I see a pullback to the low 129's as probable. After that 126 is likely. So the short term forcast is weak.

On the weekly chart, things are less obvious. Slow stochastics have rolled over but the CCI is still rising, albeit as overbought conditions. The bull engulf last week supports the uptrend while the small doji this week reflects indecision. So long-term, it looks neutral to slightly positive. Hopefully, next week will shed some light on the market direction.

For now,
Masterjaz out