Archive for November, 2009

Sunday, November 29th, 2009

The best parts of the Christmas Season are the wonderful Christmas Specials for both children and adults. Hours of fun in front of the television with free programming. This is the greatest bargain during this season and we don’t have to tweet it to you. We are incredibly lucky to have this seasonal offering to share with our families, especially in these difficult times when people are struggling to find a way to pay for necessities of life.

We are approaching the finish line to the year 2009. In the last 31 or so days of the year, we find portfolio adjustments, tax-loss sales and other tweaks to make the end of the year look as positive as possible.

Loans that are past due hit a 26 year high, underemployment is raging, unemployment is making new multi decade highs, and college graduate employment is plummeting…..are we out of the recession yet? The FDIC is operating in the red and there are more people accepting food stamps and welfare than we have seen in at least a decade. Again, are we out of the recession yet? We think not, or at least, it sure doesn’t feel as though we are in the clear yet.

Monday: November Chicago PMI is released at 9:45. Tuesday: October construction spending and November ISM are released at 10:00. Wednesday: Challenger Gray & Christmas release their November layoff index, and the beige book is released at 2:00. Thursday: The European Central Bank issues its statement and interest rate decision, Chairman Bernanke is grilled and skewered on the “Hill” but will be nominated to a second term, 3rd quarter productivity is released and major chain stores sales for November are released. Friday: November nonfarm payrolls and unemployment are released at 8:30, and October factory orders are released at 10:00.

The US Dollar index continues to trade below the downtrend line. The troubles in Dubai encouraged a bid and a rally in the US Dollar index in the Friday session. This index is ridiculously oversold. That said, there is nothing telling us that the condition is going to change. The bounce on Friday was encouraging, but looks like nothing more than a dead cat bounce. The downtrend line on the daily chart is at 76.155. The 5-day moving average is at 75.143. The top of the Bollinger band is at 76.466 and the lower edge is seen at 74.383. So long as the market remains above 74.210 we will give it to the upside for a couple of more days. However; should we break below that low, expect to see more downside movement. We are below the Ichimoku clouds on the daily, weekly and monthly time-frames. We; have sell-signals on both the weekly and the monthly time-frame but sort of a buy signal on the daily chart. Both the Market Profile chart and the point and figure chart verify the danger lurking below 74.225.

The action seen in the Friday abbreviated trading session was nothing more than a hiccup displayed in a day of high anxiety. Dubai’s loan problems and the general skittishness of the markets exaggerated the downside expectation which, were corrected early in the trading session taking the market from a negative 31 in the overnight session to a negative 14 during the day session. This slight indigestion was well tolerated when it was discovered that the USA was not really on the hook for this mess. The next level of support will be found at 1060.87. On the Market Profile chart we get into real trouble below 971.70 which is miles away from where we now are. Believe it or not, we continue to trade above the Ichimoku clouds for the daily and weekly time-frames but below the clouds for the monthly time-frame. The stochastic indicator and our own indicator are curling to the upside and will issue a buy-signal within a day or so. The RSI is already pointing to the upside. The Thomas DeMark Expert indicator is going sideways at neutral. The 5-day moving average is at 1098. The top of the Bollinger band is at 1129 and the lower edge is seen at 1042.24. Actually, remember that Friday could have been a lot worse than it was.

The NASDAQ 100 looks much like the chart of the S&P 500 futures chart. The signals on both are identical. The danger point for the NASDAQ 100 is below 1573.20. Under that level, we would expect to see a waterfall like decline. The 5 day moving average is at 1776.20. The top of the Bollinger band is at 1842.20 and the lower edge is seen at 1677.04. The market is above the Ichimoku clouds for the daily and the weekly time-frames but in the clouds for the monthly time frame. The downtrend line is at 1791.65. We understand the nervousness seen in the market when entering into the weekend given the Dubai problem. We need to see how this market fares this week with the multiple sound-bites from the “Hill,” and the “Jobs” data. We have lots of economic data to plow thru as well as a panel of Fed officials at a confab. Then, there is always the cockroach theory, Dubai being possibly the first of many problems to arise. This should be an interesting week.

Both the NASDAQ 100 and the Russell 2000 left green or white candles as a result of the Friday session. How can that be, you may ask? Well it is really simple, because we opened so much lower than were we close the day session, a green or white candle marked the day. Yes, we closed down 17.90 points on the day or 3.03% on the day. The range was exaggerated leaving a high wave candle on the chart. We closed below the Ichimoku clouds on the daily chart. We remain above the clouds for the weekly time-frame. The 5-day moving average is at 590.12. The top of the Bollinger band is at 606.85 and the lower edge is seen at 562.59. We are getting a buy-signal issued by the stochastic indicator and our own indicator. The RSI is flattish with a slight bend to the upside. The Thomas DeMark Expert indicator is firmly pointing lower at oversold levels. Should the Russell 2000 remove 551.40 we will be in real trouble. On the other hand, if this market can close above 592 and change, we will remove the downtrend line.

Crude oil seems to be fishing for a reason to bounce. The indicators that we follow are issuing a buy-signal for crude oil. We are above the Ichimoku clouds for the daily and the monthly time-frame. We are in the clouds for the weekly time-frame. The top of the Bollinger band is at 80.83 and the lower edge is seen at 73.52. The downtrend line is at 79.52. A lot of the action in the crude market is dictated to by the US Dollar. As the Dollar becomes stronger, crude weakens. It looks as though, the crude market will return to the 79 area. We like crude oil and believe that it can work its way much higher.

Gold has been on an upward tear for quite a while. With insecurities looming, the fear of inflation and the fear of currency problems has been a huge inspiration to convert funds into gold. The gold market is overbought and looks as though it could retreat and consolidate. No, we did not say crash or drop like a stone. Consolidate is the word we used. The indicators that we follow are issuing a sell-signal. Remember bubbles in other markets before you think about shorting this market. We have not seen the top. We would expect a comfortable retreat, perhaps a bit more shallow than one would like to see. The top of the Bollinger band is at 1201.10 and the lower edge is seen at 1053.50. If long keep your stops tight. We are above the Ichimoku clouds for the daily, weekly and monthly time-frames. We are overbought on all time-frames.