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Mike Paulenoff is a 25-year veteran technical strategist with experience at firms including Smith Barney, Harris Upham, and Drexel, Burnham, Lambert. He has been widely quoted and published in CBSMarketWatch, Barron's and Technical Analysis of Stocks & Commodities, among many publications.
He is currently author of MPTrader.com, a real-time diary of his trades and technical analysis of ETFs that track metals, energy commodities, equity indices, international stocks, and other markets. |
Long Into Next Week
09/22/2008
After what appeared to be a crash in September, and a BIG SAVE by the Govt, everyone will be "happy and long" into the end of this month, when many of the recent technically overbought conditions will be reloaded into the technical set-up... and which will place the stock averages in a VERY precarious position... IN OCTOBER!!
What will the Govt do for an encore next month?
For now, though, the directional trade (generally) is to be long into the end of next week. One ETF we like is the Market Vectors Gold Mining ETF (GDX). It is getting the benefit of the lift in equities AND the relative buoyancy of gold and euro/$ prices. Purely from a pattern perspective, the upleg from the 9/11 low at 27.35 to Thursday's high at 36.14 exhibits bullish form AND also argues that it has unfinished business on the upside -- for continuation into the 38.00-39.00 area prior to completion. As long as today's pullback low at 32.90 remains intact, the bullish near-term pattern remains intact and viable.
As for the pattern of the general market, the weekly chart of the S&P 500 shows a Friday closing price of 1254.96, compared with last Friday's close of 1251.70. Amazing, but the SPX recovered 121.96 points since Thursday morning! Of course, it had a bit of help from Uncle Sam and the beleaguered shorts. In any case, Thursday's low at 1133.00 certainly represents a significant low and will be defended "like there is no tomorrow" if it is remotely approaching in the upcoming weeks. Meanwhile, heavy resistance resides between 1270 and 1300, which if hurdled will confirm 1133 as a MAJOR bear phase low.
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