Stock Market Update 18 February 2008

Routine update as of the market close 15 February 2008.

There has been no significant change in the charts since my sell signals and my positions have remained unchanged.

First chart is the DJW daily line chart (click on charts to enlarge):



Since the sell signal was issued in early November, nothing has changed on this chart.

The market tried to attempt a rally from its bottom at 262.38 but to this point has not had enough strength to even challenge the 38.2% Fibonacci retracement level at 284.52. The 50 day moving average is currently at 286.70 so this area (284-286) is the first level of resistance the markets must overcome in order to start some sort of bullish reversal.

Should it hold above 262.38 and set a new high above 281.29, this would be the first bullish indication as a "higher low/higher high" would have been put in place.


Next chart is the 1 box Point and Figure chart:

Once again, the sell signal on this chart was initiated on a price break through 294.

Price has been gyrating between 263 and 281 but the short term sell signal is still in place. Target price on this chart is 223.

Of interest to note on this short term chart is if the markets were to continue to rally from this point, a price break through 282 would change the chart to bullish. This price level corresponds closely with our targets on the line chart discussed previous.


Next chart is the DJW traditional Point and Figure chart:



This longer term chart went bearish on a price print of 292 and still shows a target of 216.

Note there is some chart support on the left of the chart around the 256 area (from early 2000) and 264 (from mid 2006) so it is reasonable to expect this area (256-264) will act as a strong support level. A break below this area would be very bearish


Next chart is the DJW long term weekly chart

Again it can be seen that the 13 week moving average crossing the 34 week moving average signaled the start of a new bear market (the first since 2003).

I have added a Fibonacci retracement of the entire up move from 2003 to give some idea of possible support levels. The 38.2% retracement level comes in at 245.68.

There is nothing on this chart that indicates a bottom has been made yet and it continues to be bearish


Next chart is the DJW monthly chart:

Price is now well below the 12 month moving average at 297.21. The bear market will not be over until it can get back above.


Bottom Line:

The markets are still in a bear market pattern on the short term, medium term and long term charts. There are currently no technical indications of a recovery. I continue to hold the following positions:

-50% International bond fund
-25% USD cash
-25% Euro cash

A number of breadth charts I monitor (not shown) are showing some signs of stability and it would be not out of the question to have some sort of rally upwards from here. Until that firming of support translates into price action as shown on the charts I will continue to hold my current positions.

I am still looking for a bottom to occur followed by a strong run into the end of the year. As such, I will look to scale in long positions when the charts indicate a bottom has occurred. For now, still sitting and watching.

As always, when a change occurs I will blog my charts and changes in my portfolio.