Market Wrap- 2008 Week 7

THE TAPE:
DOW +166 (+1.42%)
S&P +19 (+1.41%)
NASDAQ +17 (+0.77%)
RUSSELL +3 (+0.43%)

THE STORY:

This week we had a pretty volatile range because of two loudmouth guys. First, Warren Buffett came out and declared that he was backing bond issuers and offered stops to the credit market. That sent the market higher. Second was good ol' Jackass. He finally admitted (in public) that the economy may be a little worse than he had originally thought. That sent the market lower. He followed that up with a virtual guarantee on the March Fed meetings resulting in another rate cut.

Interesting though... last month, if he said ANYTHING about potential future rate cuts, the DOW would have gone up 200-300 points in about 5 minutes. This week, it was the beginning of the end of the "Buffett Rally". I think The Street has finally decided that his bark and his bite are both pretty weak.

From a technical standpoint, we now have some ideas to support the retest and possible break of prior lows. Take a look at the DOW.So we have a pretty nice consolidation over the last couple of weeks and the triangle is shaping up pretty nicely. Triangles can be used to forecast future moves by time and distance. On the same chart (zoomed in), take a look at the last time we had a triangle that broke down:

You will find that, most of the time, when a major index sets up in a certain pattern or trend, it is reflected in individual stocks as well. Here are some triangles to watch for the next week or so. I have left the charts out because of the length of the list: ADM, BCE, BVN, CMI, CTRP, FNM, FRE, GILD, GLD, HANS, HOS, ITC, JEC, LM, LRCX, NOV, NUE, PDGI, SLB, STJ, SWK, YUM.

Since we have talked about MYGN for the last couple of weeks, I thought it appropriate continue the follow up. For those who took profit, congrats. For those waiting for the next level... well... take a look:



At the next support area, I am most likely going to shed at least half my position, if not take the whole thing to the bank. That area of support represents the target price for the triangle that prompted the trade in the first place.

You will also notice that GLD is in the list above. If you have been frustrated that you have missed prior moves in the metal, perhaps a break of the pattern would be an appropriate entry point.