Report, by section:  1 | 2  | 3 | 4

If you want a complete copy of the report go to BetterBizBooks.com or click on this link.  The file is approximately 1.05 Megabytes so it might take some time to download if you are using a 56k modem.

This section of the report is available in .pdf format for those that wish to have a nicely printable version of it.  The file is approximately 723 kb so it should download quickly.  Just right click your mouse on this link and it will begin to download. 

Before we go further and take a look at some stock charts I want to say “Thank You” to www.RaptorGroupResearch.com for giving me permission to publish a few of their charts.  Check out the website if you are interested in learning more about technical analysis in action.  Raptor publishes their technical analysis of the major indexes, for free, every day at their website

The monthly chart clearly shows what many market technicians call a “head and shoulders pattern.”  The head is the surge in the middle and the shoulders are key points.  Once a stock market establishes such a pattern it typically falls in value.  In this particular graph the stochastic reading, below the stock chart, shows that the monthly trend remains solidly down.  While the stochastic reading indicates an oversold direction (a reading of less than 20) it clearly illustrates that market sentiment doesn’t appear to be shifting upwards at this time.  I would also point out that the stock market clearly broke below September 21^st, 2001 lows.  As a result, the market is looking for an area of “support,” which is an area where buyers previously outnumbered sellers and drove the market higher.  The logic says that this area of “support” is where some buyers shall re-emerge and the market should stabilize in this area. 

Based on the chart below the major support appears to be around 750.  Additionally, it appears as though there is minor support around 850.  The major and minor labels are based on the amount of time in which the stocks traded around those levels.  More time in a price range = more support.  Please note that the 200 month average, regarded as major support to technical analysts, is 655. To get any additional insight into market sentiment we must look at more detailed charts.

Source: www.RaptorGroupResearch.com

The weekly chart below shows the recent trend in more detail.  In particular, take a look at the prior September lows seen around September 21^st, 2001.  There is an old adage amongst technical analysts.  Stocks hitting new highs go higher and stocks that bust previous lows keep going lower (higher highs and lower lows.)  The basic thought behind such logic is that the highs or lows represent investor psychology and sentiment.  Sentiment doesn’t change from negative to positive or positive to negative quickly.  It may shift temporarily but oftentimes the dominant trend reappears.  In this particular case the market broke the prior low, on a closing basis of 965 (established September 21, 2002.).  This is a bearish scenario that is saying “the future isn’t bright.”  The weekly chart shows a very ominous “head and shoulders” pattern that has developed with support at the neckline near 923. Additionally, we have recently busted through lows established in October of 1998 during the Long-term Capital and Asian Financial Crisis.  This is very scary to me.

Source: www.RaptorGroupResearch.com

The daily chart below provides the viewer with a more graphically detailed look at recent investor psychology.  It is quite apparent that the market began crashing in early June.  Since that time the market dropped over 20%, breaking through the previous lows established last September.  In the recent drop some minor support emerged around 940 and 876.  This basically indicates that supply and demand for stock balanced out in this area either due to fewer sellers or more buyers emerging. 

Technical analysts like to say that previous areas of support become areas of resistance in a market downtrend. As a result, we look to these areas as potential problem areas for the market if it tries to go higher.  As of today, August 1, 2002 , the market is trading at approximately 910 so the area of 940 (major resistance) is lurking right above.  This should minimize upside stock movements in the next few weeks.  

Another technical element to notice is that the market was selling off with strong volume.  The opposite can be said of the recent increase from 775 to 910.  This is regarded, from a technical analysis perspective, as a negative and is called a "divergence" between market direction and volume.

ource: www.RaptorGroupResearch.com

The below chart shows even more detail.  From the chart we note several key things:

• This chart is very short-term oriented and provides us with information on recent market sentiment and where buyers and sellers agreed on a certain price level. 
• The triangle break in blue has resulted in a decline of 100 points and is now being followed by what is likely a running correction on the low.
• The S&P 500 closed at 797 on July 23, 2002 and actually hit 776 intraday on the 24^th.  The most important price, according to market technicians, is the closing price because it reflects buying and selling throughout the entire day and more data points are available.  Therefore the 797 area is a key area to hold, on a closing basis, in the future.  Once again, longer-term trends have more relevance than shorter ones.  So, a daily chart has more relevance than an hourly chart.
• As of today the S&P 500 has risen to approximately 910, as shown in the 2nd chart below, indicating that we were able to move above minor resistance areas of 812, 841 and 878.  As a result, it is likely that the previous low of 940 would likely be “back tested.”  It is unlikely that the market would move above 940 using technical analysis.  If the market were to move above 940 I would then look at the 50 day moving average, currently at 979, as a VERY STRONG area of resistance.  The moving average can be seen on the previous graph.

Source: www.RaptorGroupResearch.com

The final stock chart we are going to take a look at is an intraday chart using June 26, 2002 data.  As we can see the S&P 500 Index ran into strong resistance once it moved up to the 855 area.  However, we can see that the stochastic indicator popped up towards the close of the market on Friday.  This is interesting because it indicates that the market is likely to test higher price levels in future days due to a healthier market sentiment.  Therefore, I look at the 876 and 898 price levels for areas of strong resistance on the way up.  We can also notice that the 914-918 price area is where the market has peaked in prior days since the graph only shows 10 days worth of price information.

 Source: www.RaptorGroupResearch.com

Legal Disclaimer:

BetterBizBooks.com is founded and operated by Dan Ross and is an personal website to provide independent and public research. This report is provided as a public service. All information provided must be understood as opinion only and is not investment advice. All statements and expressions are the opinion of BetterBizBooks.com and are not meant to be a solicitation or recommendation to buy, sell, or hold any form of investment vehicle. Any opinion made by BetterBizBooks.com is based on raw data and reports that have been presented by independent government agencies, private industry associations and other sources.  BetterBizBooks.com makes no representation or warranty as to the accuracy of the information provided. The information provided should only be used as a research tool.  Reading of this document constitutes your acceptance of these terms and conditions.