Here is a report of my weekend homework. First, the bird’s eye view of the markets:
note: .DJI, .IXIC and .SPX are the Reuters symbols for Dow Jones Industrial Average, NASDAQ Composite and the Standard and Poors 500 Index respectively.
From the daily impulses, we notice things are still very choppy and the market is trading in range. We suffered a small correction on Friday and Monday would NOT be my preferred choice to get in long.
A side note on the impulse signal. The impulse signal was developed and presented by Alexander Elder in many of his books. I use it for both indexes and individual stocks. My weekly and daily impulse signals are based on the 13 days EMA (the inertia) and the MACD(12,26,9) Histogram slope (the momentum). When both are up, the bulls are in control and the bars are colored green. When both are down, the bears are in control, only shorts are permitted and the bars are colored red. The divergence between the two usually gives an exit signal meaning the current trend may be about to change. In this last scenario, the bars are colored blue. My Worden Snapsheets charts are colored according to this.
Scanning the charts, I noticed two addition to my watch list. First MXWL, Maxwell Technologies Inc. At 14.14, the price is right at the upper channel on the daily chart and this is not the right entry but a short correction taking this on or below the EMA would make this a very attractive long. On the weekly chart, we got our first green bar in a while with the price sitting right around the support levels from late 2005.
The other addition is IOTN, Ionatron Inc. IOTN suffered a major drop in may of 2006 following their quarterly 10-Q report. The momentum took the price down to low 4s’ even after the bears let go of the control. Now we see our first couple of green bars on the weekly chart and the stock seem to be ready for a little recovery. On the daily chart, the price had a little correction which is not completely over yet. Once I get a blue or green bar on the daily chart, I would be ready to jump in given the weekly chart does not contradict itself until then. I also like getting in or around 5 since this is the point where institutions start paying attention typically.