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Weekly Wizards

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Eyeing the FXI, But Caution Remains Key

Tue, Nov 18 2008, 06:08 GMT
by Mike Paulenoff, Jack Steiman, Harry Boxer

AdviceTrade.com

Our Wizards Mike Paulenoff, Jack Steiman and Harry Boxer weigh in this week on the direction of the markets. According to Paulenoff, author of MPTrader.com:

Once again, across the board selling in equities and commodities, with a minor flight to safety into Treasuries... Same old, same old. Today's final hour had a similar, if less dramatically, negative profile to Friday. Could some entity be liquidating into the final 20-40 minutes? Possibly. In an otherwise choppy, uneventful trading session that afforded the indices a couple of meaningful rally attempts, the bulls just could not get going, despite what appeared to me to be somewhat exhausted bears in the aftermath of Friday's last-hour debacle. The pattern on the enclosed 4-hour graphic shows a series of rally peaks off of Thursday's high at 30.56. To break that series, the Q's must climb above 29.25 -- otherwise, we should not be surprised to see a break of 28.15/00 for a full-fledged test of last Thursday's low of 27.28.

One chart that appears bullish is the iShares China ETF (FXI). My pattern work argues that the rally from the October 27th low at 19.21 to the November 5th high at 27.85 represented the first upleg within an incomplete recovery rally phase, and that all of the sideways action since then represents the digestion period ahead of another thrust that should propel the FXI to 31.00-32.00 in the upcoming days. Only a break of 24.80 will begin to compromise the timing of the expected upside breakout.

According to Jack Steiman, author of SwingTradeOnline.com:

The Sp held above that critical 839 level on a closing basis. That's the good news for the bulls. That's the only good news for the bulls, especially since the Sp was down 22 points. That really isn't very good news is it!! The bad news is this. The Nas did break to a new multi year closing low at 1482. The 1500 area support line is now gone. It held on gamely all day but those last 20 minutes did their dirty deed once again as the market free fell in to the close. All the bids that held the Nas up all day over 1500, and there were many tests of that level, disappeared in the last 20 minutes of action. Once we started printing 1498/97/96 you could see the bulls just give it up as they knew they had no chance. That the bears could do whatever they wanted. They could impose their will and the bulls just ran off. It wasn't just the selling in the Nas overall. It was how leaders failed once again. The theme there is a familiar one by now. Just horrific action in stocks like Bidu and Isrg just to name a couple. The banking sector took it on the chin very hard all day. Not a lot of buying interest in those types of stocks for sure. For that matter, not a lot of buying interest anywhere. We keep hearing how just a little buying interest could spark a big rally. Not the case as the bears have willing sellers everywhere you turn. Not only that, but who's buying here? Are any of you doing any big buying or plan to? Just today alone we saw the Bkx or financial sector and the Nas break down out of their triangles. That's scary folks. These aren't short term triangles either. They are longer term and we have some for your viewing tonight. These are not for the faint of heart. These are very nasty breakdowns. PLEASE respect that message being sent. DO NOT IGNORE them. So yes, 839 held today but I don't think it will much longer. These are the worst of time and capital preservation is ESSENTIAL!!! When the financial's and the technology stocks are looking such as they are, you have to hunker down and be ready for more sustained selling to come.

Harry Boxer, author of TheTechTrader.com, eyes rebound opportunities in this down market, and selected Las Vegas Sands (LVS) as one of his Charts of the Week on Sunday:

This is a very speculative situation that looks potentially interesting for a strong pop-back, particularly if we get a good market for a few days.
The stock has absolutely gotten decimated, plunging from 144 a year ago all the way down to near 4, then rebounding back with a very sharp move that nearly quadrupled it inside of a week from 4 and change up to more than 16. LVS then retraced, bounced, and is retesting the lows here. The stock was up 48 cents on Thursday on almost 30 million, and traded 39 million, up another 53 cents, on Friday. The high Friday at 6.64 is along a line of resistance, and if it gets through the 6.65-.70 zone, I think the stock has room to run to the 9-9 1/2 area. If it does break out above the 21 day moving average and lateral price resistance at that level, the next target would be up in the 15-16 range, near the rally peak from late October and also the declining 40 dma. Stop would be 475.80. A break through there would be disastrous for the stock.

Published on  Tue, Nov 18 2008, 06:08 GMT