Monday, May 15, 2006

Weekly Review (5/8/06 – 5/12/06)

Watch out …

In my last weekly review, I mentioned that the current relative positions of Dow and Nasdaq are not normal for a bull market. Unfortunately my worry turned to be true. The Dow was down 1.7% for the week, and Nasdaq was down 4.3% and below its 20-week moving average for the first time since late October.

In my last study, I noticed that there will be something happened on this Thursday or Friday, but I thought it should be the oil price, not the rate increasing. Because the market was up strongly when people had expected the rate increasing at the week before, so logically the rate change should not surprise the market.

The strength of the down power surprised me. I think it will shadow the next week. On other hand, because the market was down too fast, there will be some technical bounce.

The gap between the two indexes is still big. The technical analysis data shows negative signs already. The next week is a critical week. If the market keeps going down, the optimistic will hide from the market.

Personally I rather believe the down is technical adjustment, even though it is too big, because the economy is still healthy and the earnings and growths of companies are still good.

Probably the market will be flat or down little on Monday and Tuesday morning. On Wednesday (or Tuesday afternoon) and Thursday, the market will bounce back. On Friday, the market will be shaking.

For individual stock, I suggest my readers to watch closely on the tech and bio-tech stocks. A lot of stocks have adjusted a lot since last week. I think that they maybe on the track to come back.

Wish you all good luck!

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