Momentum Trader Report: 08/30/09

30 Aug

Posted by Momentum-Trader as Momentum-Trader Report

Looking back at last week, it was a flat one for the market, as seen here in this weekly chart of the S&P 500.

The good news is that the bears have not been able to take control of this market. The bad news is, the market is no longer reacting to positive economic news. This indicates that the market may have gotten ahead of itself and needs a rest.

There were 4 triggers from the Watchlist on Friday. There was very nice movement in 2 of them early, but KFN gave back a lot of its gains. Here are the charts of those stocks:

RBY barely triggered and didnt move any higher. However, if gold moves higher from here, I like RBY a lot. GLD, the gold ETF, seems to always be in a triangle pattern, and it is again. Look for a breakout or breakdown from here.

Although the week was flat for the indexes, there were some awesome moves in stocks, including 2 I had in the Watchlist last week, BCRX and IMMU. I like how BCRX has consolidated. It could move again.

As I usually mention in these Sunday posts, the dollar holds the key to market direction. The dollar was strong on Friday, and a lot of volume has been coming into the dollar ETF. This could be forming a bottoming pattern, but for now, it’s just something to watch. A breakout from this falling wedge pattern would be bearish for stock. On the other hand, a break below 23 would be very bullish for stocks.

In going through charts, I noticed that some Chinese stocks like BIDU and PWRD are trading in triangle-like patterns. FXI is also trading in a triangle pattern, and could offer some direction for stocks. However, as I type this, the Chinese market is crashing. The US market has shrugged of Chinese weakness in August, but how long can it last?

We are entering a holiday weekend at the end of the week, which should mean lower than average volume. We are also entering September, a historically bad month for stocks. So far, the trend is up, but I plan to be more cautious here.