MPT Rating (02)

8. August 2008 by admin.

Friday, August 8th, 2008; MPT Rating (02)

Fannie Mae reports three times the loss anticipated and the market rewards investors with a 300 point rally…  Know when you are being baited.

The DJIA gained more than 302 points today still gyrating on the FED momentum and a technical trigger point on the major market chart but the technicals are ill to say the least and though I have heard some say we will not test the low, I beg to differ as proper technicals are required for a proper rally, and when you start ignoring the technicals you set yourself up for a fall.

Let’s break down today’s activity and chart for the DJIA:

Today’s rally, though bullish engulfing yesterday’s sell off was on less buy volume compared to the previous day’s sell volume.  The continuation higher remains possible, as we have stated before but the slow stochastic indicator is going to keep upside in check as it is already registering 80.69 on today’s chart and this is not a new burst to the overbought slow stochastic area. The MACD confirms we are in the second stage of this rally as it continues to trend higher, but has already begun the convergence which will end in a bearish crossover at the market peak.  The RSI is at 55 and therefore the average stock is no longer oversold in this market.  The most obvious and dangerous technical condition of the market averages would be the trend line the market is climb higher on here… this trend line has 4 points and has already pierced the trend once, and with the failure by the market to consolidate and form the proper base formation before continuing higher, you have to ask yourself; why is this rally setting up like a bull trap?

The NASDAQ rallied 58 points today, bouncing off a trend line which already broke down earlier this week, and in my opinion bulls are basically walking on thin air here…  You can ignore proper technicals as long as you like, but sooner or later you pay the piper.  Trust me, I’ve done it.

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 (02) again; this is another major rally with now major “Smart Money” buying in the market.  They are either missing the great ride, or know something the average investor does not know; I’ll bet the later.

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

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