MPT Rating (03)

5. August 2008 by admin.

Tuesday, August 5th, 2008; MPT Rating (03)

The FED did as expected and held rates steady and the market did as expected and advanced on the news…  Now what?

The DJIA (momentum potential tomorrow) set aside is not looking good here… the DJIA has gained +330 points today but the slow stochastic indicator is already at 63.  The chart technicals point to the potential to run higher from here, but the slow stochastic suggest the upside is limited…  and that is the real problem, as the next test of support will not be propped up by the FED, or second quarter earnings, or a housing bill.  We are forgetting we are in the summer months, when low volume and quite markets leave little reason to push stocks higher; and as one analyst recently pointed out, all the activity of the FED and the government is designed to plug holes, not build growth.  Without growth we go lower and the quicker we get to the next FED meeting the more selling you will see as no one is counting on the FED leaving rates here much longer.

The NASDAQ gained +64 points for the day, but its chart is even worse than the DJIA chart, with the slow stochastic indicator at 75 which really limits upside, the candlestick formation suggests a need for consolidation and the gap created today will need to be filled… set aside the sell signal on the chart formed 4 days ago, and the second like signal in 10 days, which can not be ignored, and suggests we will go lower on the next test of this support…  all in all there may be a momentum move higher based on today’s activity, but there is a sell off coming that will prove our bottom to be anything but.

Today’s MPT (Market Power Trend) Rating, which tells us what “Smart Money” is doing in the market and where support/resistance is came in at (03); this is very odd as it puts today’s advance into question – if this was the start of a major rally, why was it not being bought up by “Smart Money”?…  I believe they already know what I have just written above.

As Always; Be Smart, Be Patient, & You Will Be Successful.

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