Chart of the Day
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Stock Chart analysis can involve evaluating many different factors. One of the factors are trend lines. Trend lines can help and investor evaluate whether the current trend will continue or if it's overbought or oversold. The stock chart below shows how the trend lines can be uses to help evaluate an overbought stock. Notice how on the trend line to the left the stock breaks above a steep upward trend before reversing sharply lower.
March 20,2008: Note the trading range lines shown of support and resistance shown in green and the trend line shown in blue..
March 18, 2008
The Dow is approaching a resistance level that may pose problems for the current rally.
Here is some interesting research information on the largest subprime lenders
link is here:
http://web.mit.edu/joshuali/Public/JObs2/GS%20Subprime%20Primer.pdf
USING PEAK TREND LINES TO EVALUATE STOCK PRICE MOVEMENTS
MMM price movements showed resistance to moving above a long term intermediate and major peak price line. In May 2007 MMM once again touched on the major peak trendline, but the following price action dipped, but as of July 12th have not resulted in major slope changes (i.e. from positive slope to negative slope) of the 50 dma as in previous occurrences. July 12th price action broke above the major peak trendline.
PREVIOUS YEARS OF HOME APPRECIATION AND EASY MONEY
COMBINED WITH HOME PRICE DIP, RISING INTEREST RATES, AND THE EXPIRATION OF
TEASER RATES SPELLS TROUBLE FOR THE HOUSING AND MORTGAGE INDUSTRY July 1, 2007 http://www.forbes.com/facesinthenews/2007/06/26/gross-pimco-heels-face-cx_af_0626autofacescan01.html http://articles.moneycentral.msn.com/Investing/JubaksJournal/CanBondMarketStandToBeExposed.aspx http://biz.yahoo.com/ap/070628/earns_kb_home.html?.v=15 "Bloomberg.com: China China Stocks Tumble on $200 Billion Bond Sale, Plan to Start Index Futures
China's stocks posted their biggest drop in more than three weeks on concern
that government plans for a $200 billion bond ... Financial Stocks are taking a beating on the number of loan foreclosures and
subprime loan scares: Check out Countrywide Financial: stock price is below 10, 20, 30, 50 and 200
dma
The
above article spells the potential for reduced liquidity in the marketplace
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Years of high home price appreciation combined with the teaser mortgage
rates have overheated our housing sector resulting in excess home inventories.
Rising interest rates, teaser mortgage rates converting to real rates,
combined with reduction in home prices(homebuyers can't refinance into a
fixed loan because the home is not worth what it was 12-24 months ago and
because they cannot afford the payments now) is resulting in a negative impact
on the economy (i.e.. foreclosures) which will continue to translate to the
financial markets. Residential home construction represents a significant
portion of the nations economy. This are not going well in that
section, for example KB homes is slashing prices to get rid of inventory and
says they are not forecasting when it will get better.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aweFKzKWIeBE
The US stock market has been buoyed by merger and acquisition activity as a
result of global liquidity (money is easy to get and not many strings attached).
It reminds me of the Initial Public Offering activity in the late 90's that led
to a overly optimistic stock market. If a negative change occurs in the
sentiment of the easy money the market could take a significant turn.
http://money.cnn.com/2007/06/28/news/economy/bc.mergers.usa.reut/index.htm?section=money_latest
In China superheated economy compares of the Nasdaq 2000 stock market run.
Shanghai Composite up 130% last year and up 50% halfway through this year. The
stock charts of Shanghai(2007) and Nasdaq (2000) look amazingly similar.
China investors are concerned that the super bond sale could reduce
liquidity, i.e. the ease of getting money in the market. 
