S&P 500 STRATEGY: STAND ASIDE
The S&P 500 eked out a 1.4 per cent gain this past week, keeping alive the recent uptrend which we believe is corrective only.
t managed to close higher on Friday despite the waft of poor economic numbers (The New York Empire State Index was negative 11.7 per cent and the Michigan Sentiment Indicator came in at 9.6, sharply below the expected 78). At one point the S&P 500 was down about 12 points but
managed to gain about one point on the day. That gave us a tiny buy signal for Monday.
The S&P 500 does have some possible targets at 1,380, 1,400 or even as high as 1,420 before we should once again start our way down. The lows of March and August 2007 were at 1,364 and 1,370, and we closed 2006 at 1,418. It is no surprise we are trying to trade around that important pivot point and finding ultimate resistance at the upper level. The lows of 2007 have fallen, telling us that we have begun a bear market. A definition of a bull market is when we continue to make [ read more... ]
NASDAQ STRATEGY: STAND ASIDE
Despite a fall in the stock markets on Thursday and Friday the NASDAQ managed a small gain in the week. Once again we appear to be failing at the 20-day MA, an area that often acts as stiff resistance in bear markets (and support in bull markets). Failure to break through this level leaves gaining higher levels in deep doubt.
Indicators continue to rise but most remain in bearish territory. Even our vaunted Commodity Channel Indicator that we use to tell us whether we are in a down move or up move remains bearish.
It was option expiration week, and now with that out of the way the market can decide whether it wants to try and rally further or fail at these levels. It is still possible that we see at least one more attempt at the 2,400 level before we plummet once again. Other key MAs remain well away, with the 50-day MA near 2,500 and the downtrend line from the October highs near 2,600. The 200-day MA generally coincides with the downtrend line from the October high. These zones could be targets if we did get more [ read more...]
US BOND STRATEGY: LONG – CAUTION
US Treasuries at the long end of the curve fell again this past week (yields, which move inversely to prices, rose) despite continued signs that the economy is weakening. Part of the reason for the decline is word that international buying of US Treasury bonds unexpectedly fell in December. Figures showed that the central banks of Japan and the UK sold US Treasuries. On the surface this seems to fly in the face of the rise of marketable securities held in custody for foreign official and international accounts. But then, this past week they fell some $4.7 billion, the first decline in weeks. Still, year over year they are up a whopping $301 billion.
Signs that the economy continues to weaken were emphasized on Friday when the NY Empire State Index posted a negative reading for the first time in about four years. The number came in at a negative 11.7 per cent. This was far below the expected positive reading of five per cent. Then the Michigan Sentiment Indicator plummeted to 69.6, well below the expected 78. Other numbers during the week were a bit more mixed. Retail sales were up 0.3 per cent when they expected them to be flat. Ex-auto, they were again up 0.3 per cent, which was [ read more... ]
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