May 30, 2008
Markets closed mixed on the day, but we were thrilled with the action we got out of our portfolio in particular. There are still a lot of bulls out there not ready to throw in the towel because of soaring oil prices. Speaking of oil, on the week, we saw a solid decline in the commodity. So expect to see some buying interest in oil next week, as investors will see if oil still has legs to rally on. Thus, oil will continue to be the main factor affecting the markets, barring some unforeseen event. The charts on the NASDAQ look solid and will look to break the highs from May if the trend is to continue, so look for those highs to be challenged next week. S&P on the other hand had some technical damage done to it two weeks ago when the market dipped. The scary scenario that we see in the S&P is a potential head and shoulders pattern forming that could give investors a reason to sell their long positions. Head and shoulders patterns are formed by three consecutive attempts to move the market higher without succeeding. The second attempt is higher than the first and the third rally attempt. It is important for the S&P, which is now on its third attempt, to move higher. Look for a possible breakdown in the index if this fails.
Here’s the NASDAQ and S&P Charts…
