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This is Capital Essence’s Market Outlook for October 7, 2008. Subscribers, please click here to login.

Editor’s note: this column was originally published on Capital Essence’s CEM News. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

Good Morning. This is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Monday October 06, 2008.

Equity market closed lower Friday as investors remained fearful about the economy despite the $700 billion bailout plan.

Overall, it was a very wild week that saw the Dow plunge a record 777 points on Monday, clawed back about 485 points on Tuesday, and then fall for three straight sessions to end the week down nearly 815 points.

Let’s take a look at the major indices:

Chart 1.1 – Dow Jones industrial average (daily).

After pressing toward Thursday’s high in early Friday trading, the Dow gave up all of the gains as sellers stepping and pushed prices lower. Now, we’re basically right back where we were at the close on Monday. Needless to say, the action is pretty ugly. In addition, the chart of the Dow is very bearish with all of the important moving averages are declining.

In the short term, the Dow had been bouncing between 10261 and 11022 since Monday’s breakdown. So, a move outside of that range is considered significant. That’s being said, the Dow needs to hurdle and sustain above the first important resistance level at 11022 to trigger a significant reversal signal. However, to trigger a meaningful rally, last Monday’s high at 11139.6 must be taken out. Conversely, a decline below Friday low at 10261.8 indicates that the down-leg that started from last Monday’s high at 11139.6 has some legs and a test of key support at the area of 2005 low, about 9961 is, therefore, expected.

From a long-term perspective, the Dow chart will remain bearish until a pattern of higher lows and higher highs emerges. However, the leading bullish divergence on the MACD indicator suggests that we’re at or pretty close to an inflection point. So a counter trend rally should be developed soon. As usual we should stress out that we’re still in a bear market so rally is expected to be short-lived and apt to result in a lower high and a lower low, like the ones we experienced from March through May.

Chart 1.2 – Standard & Poor’s 500 index (daily).

Similar to the Dow, the S&P 500 also broke down below last Monday’s low after the early advance into the 1150 area was met with an aggressive wave of selling interest. The action is bearish and suggesting that further short-term weakness is likely. Right now, the most obvious level to watch is the 2004 low, about 1060. At 1099, we’re only about 39 points or 3.5% away from it. Not only that the 1060 level is a pretty strong support, the MACD indicator is also approaching the level that often marks a short-term bottom of some kind. So we should expect at least a counter trend rally follows the test of the 1060 level.

In summary: technically speaking, Friday’s decline indicates that Wall Street believed the bailout plan will not work. This is a very important message and we should not ignore it. However, the market is pretty much oversold in a short-term basis after last week sell-off. So we should expect at least a counter-trend rally, which might last about 2 to 5 trading sessions. Although, as we’ve noted above, we’re still in a bear market so the rally is expected to be short-lived and apt to result in a lower high and a lower low, like the ones we experienced from March through May.

Until next time, good luck.
(By: Michelle Mai for Capital Essence)

Note: Michelle Mai writes technical analysis for Capital Essence and is the editor of Capital Essence’s “Market Outlook” newsletter. To receive the daily edition, please subscribe. It’s now available at a monthly rate.

Editor’s note: this column was originally published on Capital Essence’s CEM News. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.

這是Capital Essence對2008年10月6日(週一)的市場技術分析。

儘管7000億救市計劃獲得通過，但是投資者對經濟前景仍充滿擔憂，上週五美國股市收盤下跌。

回顧上周的行情，大盤可謂暴漲暴跌，週一道指創出暴跌777點的歷史紀錄，週二報復性反彈大約485點，接下來連續三個交易日下挫，整個一周道指下跌大約815點。

我們來看看各大股指的情況：

圖1.1 道瓊斯工業平均指數(日線圖)

上週五上午道指一度試圖返回上週四高點，然而空頭入場後道指大幅下挫，全部放棄了上午的漲幅。現在我們基本回到了週一收盤時的點位。不用說，這樣的走勢非常糟糕。另外，道指所有重要的均線全部呈下降趨勢，這是非常不利的。

短期來講，道指自從上週一暴跌之後一直在10261-11022點的區間內振蕩，如果道指突破這一區間，意義將十分重大。換句話說，道指要想激發重大的發轉信號，首先需要攻克並持續站上11022點的重要阻力位。不過，要想觸發一輪強勁攻勢的話，必須攻佔上週一高點11139.6點。相反，如果指數跌破上週五低點10261.8點，則意味著從上週一高點11139.6開始的下跌行情還將繼續，那麼指數將有望測試2005年低點區域的關鍵支撐，大約9961點。

從長期來看，道指的圖形在形成“高點更高”和“低點更高”的形態之前依然看跌。不過，MACD指標的快線同價格出現正面背離，意味著轉折點已經十分接近，因此道指應該很快會出現一波逆勢反彈行情。同往常一樣，我們必須強調，我們仍處在熊市當中，因此反彈行情持續時間不會太長，而且有可能以“高點更低”和“低點更低”的形態收尾，就像大盤3月到5月間的幾次反彈行情一樣。

圖1.2 標普500指數(日線圖)

同道指類似，標普500上週五上午攻至1150點的區域後遭遇強勁拋壓，收盤跌破了上週一的低點。這一走勢是看跌的，意味著短期內可能進一步下挫。目前最應該關注的位置是2004年低點，大約1060點。目前標普位於1099點，距離該位置只有大約39點或3.5%。不但1060點是一個非常強有力的支撐，而且MACD指標正在接近預示著短期見底的位置。因此我們預計標普在測試1060點之後至少將出現一波逆勢反彈。

總結：從技術上講，上週五大盤下跌說明華爾街並不認為救市方案能夠起多大作用。這是一條非常重要的信息，我們不應將其忽略。不過，經過上周重挫之後，市場短期內已經嚴重超賣，因此我們預計至少會出現一波逆勢反彈行情，可能會持續大約2-5個交易日。不過正如我們上面提到的，美國股市依然是熊市，因此反彈應該是短暫的，最終還可能形成“高點更低”和“低點更低”，就像大盤3-5月間的數次逆勢反彈一樣。

(本文作者：Michelle Mai)

注﹕Michelle Mai為Capital Essence(錢途集團)撰寫技術分析﹐並為包括市場趨勢在內的數份金融市場投資通訊的首席市場策略師。如欲每日盤前收到更多最新分析, 敬請訂閱。

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