Weekend Analysis

The opinions expressed in this column are based on how I interpret Events, the Market, and the Charts -- unless otherwise noted --  and are not recommendations to buy or sell securities. Trading stocks involves risk. Never put your money on the line without a thorough understanding of what you are doing, and why you are doing it, based on your own personal experience. No Chart Pattern works out the way we think it should every time,  so it is vitally important to have a protective Stop-Loss and/or Exit point planned before entering into a trade. Do your own research and testing before attempting any of the techniques discussed in my columns, materials, courses, or emails. I cannot be held liable for any trading decisions based on any information obtained from me. - Rick LaPoint

February 08, 2008 - It's been a rough few weeks for me personally, with illness in the family, but I'm back to catch up on the Action.

Let's begin we the Long View and then move in closer.

Looking at the Monthly chart for the Dow, we see the important 20 Month Moving Average was most decisively breached in January, all the way down to the Fibonacci 100% area. Notice that we came up with 100% because that is where the Bubble peaked in late 1999. By Month End, though, Price closed at the Moving Average. That Resistance is where things began to fall apart in February. Note that our 123% Fibonacci Resistance is just above this level.

The Daily Dow shows a fall from the Congestion area of early January to the Fibonacci 62% area at the lows of Thursday & Friday. Those double long/forked Candle Wicks are represent the 1999 Highs Support area seen on the Monthly chart above.

So far, the move down over this last week has been fairly standard, with a Pullback at a Price Cluster area from December & January, and the 30 Day Moving Average (and the 20 Month). Price is hovering around the 50% area of the move over the previous 2 weeks. Hmmmm..... Now What? We are right in the middle of and upper & lower Target, which is where I'm guessing we will remain this week. We'll find out.

January 11, 2008 - We have been expecting for some time now that the Dow would fall far enough for a Test of the August 2007 Low. That happened this last week, but thus far appears to be fairly weak. The Fed announced the bias toward significantly lowering the Interested Rate, which gave a boost to stocks -- most of which then was lost.

The 50 Day Moving Average is just above the 200 Day Moving Average, but not by much.

Note Friday began at Fibonacci 24% and fell from there. I began an upward Trendline; let's see how well it works as Support.

We have also been expecting Price to hit the 20 Month Moving Average. As we see below, this area has acted as Support since Price Crossed above in 2003.

Well, our Big Picture Targets for the Downside have been hit -- now what?

Friday, 19th is Expiration, so Tuesday & Wednesday are often interesting days.

I'm going to guess that we hold this week with some ups & downs that are nice for daytraders - especially Tuesday & Wednesday -  and gaining momentum for the Swing as we go into the week of Jan 20. The Fed is going to attempt to prop this Market, so despite Friday's Loss-of-Faith, we will probably see some Big Money step in, believing things will improve.

If my opinion changes during this next week based on the action, I will post an update.

As always, I'm just guessing . My guesses over the years of posting my ideas have been pretty good, overall, as those of you who have followed will attest. And when I have been incorrect, I have always stepped up to admit it. We may have a crystal ball, but that doesn't mean we always have the talent or emotions (or sleep, lol) - at any given time - to understand what we see!

That's the Beauty of the Stop Loss. When we are INCORRECT  (never use the word, "Wrong" during the Trading Session) we remove ourselves from the Game with a Small Loss, thus giving ourselves the ability to return refreshed enough to fight another battle with Courage, Knowledge, and Strategy.

And always have the Courage to walk away to Recharge your Emotional Batteries when the Opportunity presents itself -- or becomes necessary.

Have yourselves a great 2008!