Archive for January, 2009

Sunday, January 18th, 2009

For all those anxious to see the end of the Bush bashing years, you will have to wait several more months.   The economy isn’t getting any better, however; we are getting used to the fact that we can live without spending.   We shoppers have become or evolved into price seekers and not price takers.  We will flit around until we are sure we got the cheapest price for whatever it is that we are targeting.  This makes life very difficult of the merchants who, would actually like to make a profit on their sales, but the price conscious consumer is making their lives difficult. 

When looking at the stock market, we see that the consumer is using the same shopping model that it is exercising when shopping.  We are a price conscious bunch of investors and will wait for our prices rather than overpay for the equity.  We continue to worry that we will both miss the up move or the down move and tend be very neurotic.  

This week we will have the inauguration of the 44th president of the
United States, Barack Obama.  On Tuesday we will also have earnings from IBM, Johnson and Johnson, CSX etc.  The love-fest is expected to last, at the very least, into mid-week.  We have a very light economic calendar so, it could be possible that we will see a run to the upside this week.
 

Thursday:  December housing starts and building permits are released at 8:30

The US Dollar Index retreated in the Friday session.  The uptrend line for the Monday session is at 83.46 and for the Tuesday session it is 84.61.  All the indicators that we follow herein are issuing a sell-signal.  The 5-day moving average is at 84.71.  The top of the Bollinger band is at 85.578 and the lower edge is seen at 80.047.  The daily chart is in the Ichimuko Clouds, the weekly chart above the clouds and the monthly chart below the clouds.  The US Dollar index appears to be ready to retreat back to the uptrend line.  We don’t really expect to see much action to either the up or the downside this coming week.  We do have the inauguration of Barack Obama and we have some important earnings releases, but economically there is very little on the agenda.  The chart looks as though the high of 85.92 will be a bit troublesome for the market to remove.  The chart also shows that we have lots of supply over-head and lots of support beneath our current level.   It is clear that we have to remove 85.92 to open the door to higher levels and it is also clear that we could retreat to the uptrend line and still remain in an uptrend.  If we were forced to make a decision, we would conclude that this market will revert to the uptrend line and there, decisions will be made.  Beyond the uptrend line it is important for this market to stay above 81.99. 

The S&P 500 rallied in the Friday session probably pushed around by the expiration of the January options.  Thursday we watched the S&P 500 test the horizontal support line, breaking that line by 0.25 and then rallying taking the index positive on the day.  It looked like an important turn for this market and we believe that there is more upside to this rally.  All the indicators that we follow herein are issuing a buy-signal on the daily chart.  We are below the Ichimuko clouds for the daily, weekly and monthly time-frames.  The S&P 500 will feel the weight of supply as it rallies.  However; should this market rally beyond 1061.40 it will quickly move to 1260.24.  On the other hand, should this market retreat below the Thursday low of 812.75, we will test the November lows and if they fail to hold this market up, we will feel a whoosh lower.   Before you scare yourself into shorting this market, we are oversold enough to mount a rather decent rally for the short term.   

The NASDAQ 100 enjoyed a pretty good rally in the Friday session taking this index to the daily chart’s downtrend line.  The stochastic indicator, our own indicator and the RSI are all issuing a buy-signal however; the Thomas DeMark Expert indicator is going sideways at oversold levels.  All the indicator that we watch seem to be losing strength.  The 5-day moving average is at 1188.15.  The top of the Bollinger band is at 1269.71 and the lower edge is seen at 1151.88.  We are below the Ichimuko clouds for the daily, weekly and monthly time-frame.  We seem to be building a nice base, however; we must stay above 1138.50 or risk a trip to 1089.50 and then, of course, the November lows.  

The Russell 2000 did not perform as well as the other indices in the Friday session.  We seem to be losing some steam on the upside.   The 5-day moving average is at 463.00.  The top of the Bollinger band is at 511.66 and the lower edge is seen at 449.27.   We are below the Ichimuko clouds for the daily time-frame.  All the indicators that we follow are flattening out although the stochastic indicator and our own indicator remain on a buy.  The RSI and the Thomas DeMark Expert indicator are both going sideways.  If we close above 516, we believe that this index will make a run to the upside taking us to 541.20 and 565.80.  Above those levels there is almost no supply and the market will move quickly higher.  Before you run out and buy this market, here is the downside.  Should we trade below 393.60, we will test the November lows and below the November lows is a huge vacuum.  We have a 13 count and we believe a cautious stance should be taken.     

Crude oil closed lower in 7 of the past 8 trading sessions.  The market needs to close above 43.92 to remove the downtrend line.  The 5-day moving average is at 43.74.  The top of the Bollinger band is at 52.489 and the lower edge is seen at 37.947.  We seem so be retreating in a very orderly fashion with little excitement in the trade.  We are watching the low of December 24th 2008 to see if it holds.  That low for March crude oil was 38.00.We are below the Ichimuko clouds on the daily, weekly and monthly time-frames.  We are grossly oversold as measured by the indicators that we follow herein, however; not one is issuing a buy-signal and there isn’t a bend upward to be found, anywhere.  We do not know where the bottom for crude oil is.  It could be near by or it could be 10 dollars lower.  We do know that we are closer to the bottom than we are to the top. 

Gold remains below the downtrend line on the daily chart.  We did enjoy a rather robust rally in the Friday session.  All the indicators that we follow herein are issuing a buy-signal with plenty of room to the upside.  The 5-day moving average is at 819.54.  The top of the Bollinger band is at 893.89 and the lower edge is seen at 806.36.  We are above the Ichimuko clouds on the daily and the monthly time-frames but below the Ichimuko clouds for the weekly time-frame.  We would like to be long gold but will wait till either it breaks the downtrend line to the upside or retreats back to 801 or so.