• NASDAQ

July 18, 2008

This was the best week we had seen in the markets in quite some time. In fact it was the first week to finish positive in over seven weeks in the S&P. That is a long wait. Despite two very strong days on Wednesday and Thursday, the bulls weren’t too enthusiastic to put anymore of their capital to work heading into the weekend.

In both the S&P and the NASDAQ we have overbought conditions in a confirmed downtrend. As a result we took this as an opportunity to short the rally in the S&P, and like all trades in this type of market, we will keep our stops rather tight.

For the S&P resistance came exactly where we thought it would come and that is in the upper channel line as shown below in the second graph. Our analysis tells us, that we should see some selling interest next week, at and around current price levels.

Remember the status quo hasn’t changed and we are likely to see further days to the downside in the market. The key is to control losses, and remain disciplined at all times (you should be doing this in even the best of markets). Check out our weekly summary, for an update on all of our charts and a recap of the week that was.

Here’s the NASDAQ and S&P Charts…

NASDAQ

S&P

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