The market pulled back which was not too unexpected after a two day rally of over 20% since Friday. The market consolidating these gains in a narrow range just maybe a positive for a more intermediate term rally.The weekly and monthly charts continue to be oversold and have room to have a much stronger reaction rally within the downtrends. This rally will switch the daily trend from down to up.
The market put together two strong up day and now we sit in short term overbought conditions. The way this market behaves in spite of more bad news and to hold its gains while the overbought situation is resolved will be meaningful. Friday the market rallied in face of the negative news and today the market rallied in face of overbought conditions in the short term. Now the market needs to show it can hold these gains. A few narrow range days just might be what the doctor ordered and then this market may can test the top of the range up near 1000. We broke thru 900 today. This does remain a bear market, but the longer time frames remain oversold and a reaction rally within the weekly/monthly charts can give this market a multi week run to the upside. Something we have not seen most all year.Here is some info on just how difficult this year has been. There are 10,002 US Stock Mutual Funds which Morningstar tracks and none are up on the year. The average performance is -43.63%. There are 2,892 Foreign Stock Mutual Funds they track and none are up on the year. None were down less than -10%, and the average performance was -50.75%.
The market is speaking to us – are we listening?It was a rough week for the economy. The Big Three automakers flew back to Washington to beg for money. When I was in Australia, it was front page news in every newspaper that each beggar flew in a separate private jet. I wonder how they came this time – on JetBlue?
Bank of England cut their rates by 1% to the 2% level. The ECB cut their rates by .75%. The Fed is expected to cut the rate to .5%. Sweden cut their rate by 1.75%. Hedge funds continue to have problems, with GS’s Liquidating Partners down 55% so far this year. Citadel Funds lost 11% in March and is now down 47% for the year. Oil was down to $46.66 with Exon down on Merrill’s forecast of $25 a barrel for oil. With Merrill’s call to $25, are we near a bottom in oil? Goldmans call for oil hitting 200 was the top in oil!The number of those collecting US jobless benefits rose to over 4 million, the highest level since 1982. Tomorrow the markets wait for the new claims number.
As the saying goes it’s not the news but the reaction to the news. All the news continues to be negative and more negative reports came out today about employment, etc.On Friday a chart was shown to watch support between 810 – 840. THis support has held and now has regained the 870 levels. Today had good upside and strong upside volume. These supports will need to hold and follow thru is key.
The market tried to recover the 850 support levels as the Bears could not follow thru with yesterday’s selling. NH_NL remains flat and NL did not expand in this latest selling. This indicates the selling pressure may be nearing exhaustion. The bulls will need regain this support level and close strong on solid internals. This would then be considered a test of the recent spring action we saw on 11/21.
Most of the major indices gave back over half of their five day gains in a single day. The Russell 2000 fell almost 12% for the day. The SP-500 fell 8.9%. The DJIA fell 7.7%. The Nasdaq fell almost 9%. The Philly Oil Service group was down almost 16%. All the major indices fell and fell hard.
The group ended a shortened week nearly flat as many of the picks did not hit their entry points. 2 Spikers had positive gains as Dave F wins Gold and Jeff win Silver. They both will split the Bronze points.Spike Members, Helena, Rodyrk, Mike, and Dennis all win $20 dollar credits for outperforming the Bronze medalist.Congrats to this week’s winners!
The markets added another up day making it 4 in a row as we head in the long weekend as the Thanksgiving Holidays begin. We have to go back several months to find 4 up days in this Bear Market.Volume was light as expected before we go into a holiday weekend. Up volume was again 90% so breadth was strong. The news is still grim and likely will be for some time. It always is as market tries to go thru a bottoming process. By the time the news becomes positive the markets will be in an early stage of a bull market. We still have a lot of issues to work thru and this remains only a bear market rally for the moment. Until we can test supports and they hold for more than a day we will not know if we have a chance for a bottoming process to take hold.I hope those of that will be celebrating the US Thanksgiving Holiday will stay safe and Happy Holidays. The Markets are closed tomorrow and will be open only half day on Friday.
Fed announced two new programs that will provide another $800 billion to "unfreeze" credit for homebuyers, consumers and small businesses. $600 billion of debt will be purchased by the Fed of direct debt of Fannie Mae, Freddie Mac and the Federal Home Loan Banks, as well as mortgage backed securities of Freddie, Fannie and Ginnie Mae.