Quick and Dirty Market TA for 7.26.2010

In this edition of the Q&D I have divined some analysis from the SPX chart since everyone loves to talk about it so much.  As always, images can be clicked to enlarge.  Behold:

Friday's candle closed inside of an existing range, and signals a potential revisit to the lower side.  Quite a few Twitterers feel that present conditions warrant an overbought reversal, and should retrenching occur I'd be looking for support around 1065.  However, the weekend press feels quite bearish, and short covering adds the power needed to wipe out old resistances.

An aside.  The reason I prefer charting the DJI lies in the fact that the larger, lower beta components of the Dow better indicate institutional money flow, in my view.  Last Friday's candle on this index closed above two downtrends I have been charting, as well as above the 200 dma.  These in addition to its MACD which also made a decisive move off the zero line over the last 3 days of last week.

Returning to the SPX, see the blue boxed MACD making a nice series of increasingly tall bars in the histogram and with a good angle on the signal line when taking out the zero.  If the market wants higher, I feel like we need to open at or above Friday's close and put in another full bodied candle or two before back-testing the 1102 level.  The confluence of 200 dma and 2 standard deviation Bollinger indicate clear resistance at the 1113-1115 level.

Going back to the Q&D for 5.24.2010 take a look at the DJI weekly.  Presently we see a curling under of the MACD on the DJI weekly here, and a weekly close right at the 10430-ish area that marks the top of a developing resistance area.  Here again, the angle of incidence on this indicator says time to put in a weekly candle above 10434 with an objective toward 10610 over the next few weeks to months as we put in our next lower high.

Many, many stock specific charts have set up with individuals beginning to go off like bottle rockets.  For now, I've got the consolidation scanner at the top of the daily checklist, especially favoring those right angled ascending triangles like the one FNSR broke out of last week.  Props to @ldrogan and @downtowntrader for picking up on that one just days before it exploded.

Good luck.

Green Lining: Will Cloud Conversion drive a new Tech Bubble?

Stayed up too late last night going over the changes between Citrix's 2008 and 2009 Form 10K's and experienced a lightbulb moment.  Given that:

• Tech is one of the few sectors that the United States still leads,
• large companies have enormous sums of cash on their balance sheets,
• near to medium term economic reticence leaves these companies seeking more avenues to streamline,
• stupid shit like NFLX are finally starting to give up their Nasdaq "leadership" roles,
• and that The Cloud is an important technology still young in its wide acceptance,

could we not expect the tech sector, to be even more stretched due to reallocation into this last bastion of growth?  While it may seem that widespread recognition has already occurred given the PE's of companies like FNSR, CTXS, JNPR, FFIV, and VMW, their market penetration has only just begun.

As we remain in a buyer's market, smart enterprises, like smart people, will continue invest in themselves,  laying the foundations for future growth, before gambling with uncertainty.  I like tech here but make sure to keep tabs on market share data.  Some segments have begun to get crowded and there will be winners and losers, first though, widespread recognition of the trend must occur after more companies perform handily in this blood bath of a market.