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Chart Talk for Weekend Consumption - Money Matters for 11/4/05
With the major indices making steady headway all week, it would seem timely to do a little chart guessing about near-term direction. I call it guessing because even the best chartists in the world often are completely blind-sided, though all told, understanding charts and what they can tell us is always helpful in making investment decisions.
First, the Nasdaq, which recorded gains every day this week except Tuesday, when it lost 6 points. For the week, the Nasdaq gained just shy of 70 points. Very solid and indicative of where the leadership now resides - in technology small and mid-caps.
The index finished the week at 2,169.43, within shouting distance of the recent (and 52-week) high of 2219.91. After making a double bottom mid-October, the Nasdaq has taken of like a rocket, powering up over 140 points in three short weeks. It blasted through both its 200 and 50 day moving averages and is in a breakout position. Volume was spectacular on both Wednesday and Thursday, and were the best days of the week. The volume was off slightly on Friday, indicating that traders were not taking profits, preferring to stand pat over the weekend.
On the NYSE, trade was a bit choppier, but barely, though the index was higher only three of the five days this week. Still, the NYSE posted a stellar 137-point gain for the week and has also moved beyond its 50-day moving average. It is not showing the same kind of momentum as the Nasdaq, though it is within 160 points of the recent August highs.
The Dow was the laggard, though still the most widely watched index. For the week, it gained 126 points, which translates into just over a 1% rise. The Dow also exceeded its 50-day moving average, but is far from its 52-week high, which was reached back in March, and has not recovered fully from the nearly 1000 point spring correction. The Dow is still down for the full year by about 270 points and the charts aren't really offering much in terms of direction.
If it's my money on the line, I'm putting it to work on Nasdaq stocks, especially those in the applications software and communications technology business. Internet advertising is also a hot property, as Google clearly has demonstrated.
Tat's a wrap for this Friday. Have a great weekend.
Dow Jones: +8.17; 10,530.76 close
NYSE Advancers: 1516
Nasdaq Advancers: 1530
NYSE New Highs: 70
Nasdaq New Highs: 97
Gold: -4.00; 457.90 close
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