This week saw the economic stimulus package FINALLY get passed. However, don’t hang your hat on that development being the end all be all. Remember 2001? Yep, all the king’s horses and all the king’s men tried to put humpty dumpty together again and did a good job for a few months. But in the end, we still went lower and didn’t bottom out for another year.

We know who is going to get our economy out of this funk and get us on to the next bull market cycle. It’s not the government, it’s not some stimulus package — IT’S YOU!

The way you are going to do that is by taking control of YOUR destiny and by having a plan and trading that plan. It’s ALL ABOUT YOU and empowering you to be the best that you can be regardless of what the market throws at you.

It’s our job to get you to the point where you no longer have to ask “is the market going higher or lower? You won’t care because you’ll just trade what you see, not what you think, hear or fear and you’ll do it according to a plan.

Instead of listening to what all the hoopla herders on TV are saying about it, we’ll revert to our tried and true — that being we let the market tell us what to do by the action it exhibits…

In the really big picture sense as you can see the overall trend is down. Now you know why they call bear markets the “Slope Of Hope.”

By the same token however, within the triangle we are at trendline support so we could make another run for the triangle resistance at 8700. However, before we do that we need to get through the shorter-term resistance level of the chart below.

Moving on to the NASDAQ 100 index, we’ve got more of a stair step downtrend in place.

Nothing new here — just more of the same old same old…

What can we say? It’s all about the green line. A break below it and it’s time to go short on this index. Just remember the following with regards to TRENDS. All downtrends break to the upside and all uptrends break to the downside eventually.

So you see, even if the herd runs the market on the stimulus news, it’s still going to be all about the charts and the charts are telling us we still need to get through resistance levels. And let’s face it — there are a lot of them all the way up.

The big question then becomes what happens after the dust settles? What happens after the stimulus news wears off? That’s where the turning points are assuming a gap up on Tuesday. Remember, the market is the boss.

Notice in the 60-minute chart the full stohcastics are back to being overbought. If this index is going higher, it must break thru the 1280-1300 level — that is resistance. The real key clue as to how far (if at all) this index can go may be to look at (and watch) what some of the kingpins of this index are doing — AAPL and GOOG.

Speaking of kingpins of this index, don’t waste your time looking at MSFT, CSCO, INTC, ORCL as they haven’t gone anywhere in eight years and they are also favorites of the “Managing To A Benchmark” crowd.

When these names break down, the market breaks down. The only difference between these two names and the NDX 100 is that they have both followed through with higher highs year to date vs. the NDX 100 having a hard time breaking through the highs of January.

Dont forget about QID (the NASDAQ short ETF). When it triggers, it usually ends up being a big trade. While we don’t know when or if this will ever trigger, we still need to keep it on the burner. A break above the pink line will likely occur should the market break down.

We’ll let the market guide us by the action it exhibits at key technical analysis levels. So you see whether the market is going up or down, it really doesn’t matter. All that matters is what the charts are telling us.

Regards,
David Grandey

February 17, 2009

David Grandey

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains.  A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

View articles by David Grandey