5/1/08
Bulls show the power and push Dow closing above 13000 first time this year ( Dow 200ma is 13054). It told me that yesterday reversal sign is not confirm but it is not false yet. Because tomorrow is the key to see if the bulls still have some steam to go up decisively. The S&P did close above 1400 (1409 just stunk in the resistance zone) If tomorrow all major indexes post strong upward closing, it is very good news for bulls because it all break the primary bear downtrend.
Still, lack of volume are an issue ( not just stock market, so is options market trading volume) and number of new highs of days are the key.
Today, initial jobless claim is reaching 380000 which is bearish fundamental. Also, we have tons of layoff announced for last few weeks. After the market, JAVA SunMicrosystem annouce layoffs 2500 jobs. Home depot is going to close 15 stores nationwide..... it all indicate the non-farm payroll number is going to be very ugly tomorrow ( censensus -70k, I am guessing the outcome would be -120k-150k). Auto sales down. Most important, state sales tax revenues delivered the weakest performance in 6 years during the first quarter 2008 while growth in overall state tax revenues continued to deteriorate, according to preliminary data in a report by the Rockefeller Institute of Government. Folks, this is very bad in addition to the GDP showing weak consumer spending(if main street believe economy health is accounted of 2/3 of consumer spending, also ask yourself "Do you find out you need to spend more during supermarket visit since beginning of this year, paying more on your gasoline, and you probably will not spend a dime more for unnessarities?). With lots of trouble in basic fundamental health, even Fed has done the easing effort and congress kick in stimules plan( which they did the same during year 2001 but the result is failed if you could remember), it cannot avert the US economy into positive zone at the second half of 2008. The Wall street is currently showing different story to all economic data so far. Therefore, the stock market seems look good for short term, but all major indexes are just flirting around 200ma area and the daily, weekly, monthly charts are all telling me it is still a bear market unless it could build a higher lows on going this month. I guess the time would show if this hope could last and works for stock market as well as the US economy. It seems it does not make sense if I say tomorrow the market would drop 300+points for the Dow if the non-farm payroll number is far from estimate.( This is just a gut guess since market still have positive sentiment so far) It could happen if the US dollar is crashing together with the number compare to Japanese Yen. Check the USD/JPY chart with S&P/Dow stock chart and you all know what I mean. Let us see if bulls are still have upper hand.
Thursday, May 1, 2008
Wednesday, April 30, 2008
Fed ingnite Selloff?
4/30/08
With expectation high, Fed did deliver the wishes and cut quarter basis point. However, the statement signal this is probably the end of the easing cycle. As I suspect and expect, market sell off the Fed cut rate news and close in red zone after Dow did reach 13010 in a brink of an eye. The S&P still cannot breakout the heavy resistance zone(1400-1406). Dow is broken the uptrend channel in 60mins window chart since 4/21/08. Today it formed a bearish gravestone Doji candlestick chart pattern just below the high resistance mark 1406. It needs one or two more days to confirm this reversal trend. Also, the indicator of RSI, Full Sto are getting close to sell signal. Although GDP number meets its estimate, non-resident investment(also the consumer spending) has turned south in Q1 2008. And market will announce the revise GDP on coming month( I am sure it will revise below water). After market, MSFT directors are in meeting to discuss raising bid for YHOO. It could be positive for both companies as well as the market tomorrow(at least for morning hour trade) if the deal is done. Let see how trader continue to play their trick.
With expectation high, Fed did deliver the wishes and cut quarter basis point. However, the statement signal this is probably the end of the easing cycle. As I suspect and expect, market sell off the Fed cut rate news and close in red zone after Dow did reach 13010 in a brink of an eye. The S&P still cannot breakout the heavy resistance zone(1400-1406). Dow is broken the uptrend channel in 60mins window chart since 4/21/08. Today it formed a bearish gravestone Doji candlestick chart pattern just below the high resistance mark 1406. It needs one or two more days to confirm this reversal trend. Also, the indicator of RSI, Full Sto are getting close to sell signal. Although GDP number meets its estimate, non-resident investment(also the consumer spending) has turned south in Q1 2008. And market will announce the revise GDP on coming month( I am sure it will revise below water). After market, MSFT directors are in meeting to discuss raising bid for YHOO. It could be positive for both companies as well as the market tomorrow(at least for morning hour trade) if the deal is done. Let see how trader continue to play their trick.
Big Problem ahead-intra day post
4/30/08
Here is the day the Fed will be announced the quarter point cut that investors want later afternoon. I am writing this blog at morning and would like to put a guess on what would be the outcome of the rate decision. Most likely, Bernanke will make the quarter point interest rate cut and have statement inflation is moderating and not a problem. However, the long term bond yield chart is telling me a different story. It is forming an inverted Head & Shoulder pattern and if the neckline is broken, it means the inflation keep going up sharply. This would post a big problem ahead for the Fed in coming months on whether it needs to raise the rate instead reduce it to fight off the inflation or not? Then, of course, would post big treat on market to sustain the upward momentum on coming months. The better action probably, no rate cut today and watch carefully ongoing forward to see what is getting worse and react right away to cure inflation pressure or push forward the growth little more. Let see the outcome afternoon.
Here is the day the Fed will be announced the quarter point cut that investors want later afternoon. I am writing this blog at morning and would like to put a guess on what would be the outcome of the rate decision. Most likely, Bernanke will make the quarter point interest rate cut and have statement inflation is moderating and not a problem. However, the long term bond yield chart is telling me a different story. It is forming an inverted Head & Shoulder pattern and if the neckline is broken, it means the inflation keep going up sharply. This would post a big problem ahead for the Fed in coming months on whether it needs to raise the rate instead reduce it to fight off the inflation or not? Then, of course, would post big treat on market to sustain the upward momentum on coming months. The better action probably, no rate cut today and watch carefully ongoing forward to see what is getting worse and react right away to cure inflation pressure or push forward the growth little more. Let see the outcome afternoon.
Tuesday, April 29, 2008
Indecision
4/29/08
Today's action is pretty much same as yesterday, not much volume ( In fact, these two days are the least volume trading day since year-to-date). Major indices are holding in steady but start to sell off some after 2:30pm central time. Today's star is MA which posted solid earning and MA is trading uncharted territory which carry V into sky too. Investors/traders are all waiting tomorrow Fed rate decision and that maybe the catalyst to push market higher. This rate decision is by far hardest to predict by many economists. But the Fed statement is way much important than no rate cut or quarter point cut in my point of view. Also, market reaction after the meeting would prompt the recent rally is valid or not. All major indexes are in resistance zone and it seems ready to breakout that zone and break the primary downtrend draw back from 10/2007 (especially the S&P index). Tomorrow GDP number in the morning properly will not affect the market too much unless that number is far from the estimate (+0.5%) for first quarter of 2008 (since its past already and a laggard indicator anyway). Let see how the market turn out.
Today's action is pretty much same as yesterday, not much volume ( In fact, these two days are the least volume trading day since year-to-date). Major indices are holding in steady but start to sell off some after 2:30pm central time. Today's star is MA which posted solid earning and MA is trading uncharted territory which carry V into sky too. Investors/traders are all waiting tomorrow Fed rate decision and that maybe the catalyst to push market higher. This rate decision is by far hardest to predict by many economists. But the Fed statement is way much important than no rate cut or quarter point cut in my point of view. Also, market reaction after the meeting would prompt the recent rally is valid or not. All major indexes are in resistance zone and it seems ready to breakout that zone and break the primary downtrend draw back from 10/2007 (especially the S&P index). Tomorrow GDP number in the morning properly will not affect the market too much unless that number is far from the estimate (+0.5%) for first quarter of 2008 (since its past already and a laggard indicator anyway). Let see how the market turn out.
Monday, April 28, 2008
Bulls vs Bears
4/28/08
Since the opening of the market, bulls are trying to break above the resistance while bears are holding their belt tight not losing. For all major indexes, almost it is a flat day which indicate the balance of bulls and bears. S&P still cannot close above 1400 mark yet while it does trading higher intraday. Most likely, market is waiting to see how the Fed rating decision on Wednesday and we will have the important non-farm payroll, unemployment index announce on Friday.
Today, Morgan Stanley see big bank woes just beginning.."More capital hikes and dividend cuts are coming as our credit deteriorates and forward earnings decline" analysts led by betsy Graseck wrote in a report. "We think we are only in the third inning of the credit cycle and expect this credit cycle will be worse than the slump in 1990-01". Well, I mostly agree with the Morgan Stanley's analysis but I think it is going to be much worse since post-war period ( or even as same as the great depression time ). Do not let the market makers/traders to trick you with the recent rally, you would regret it later for sure to participate this fake rally. This upward motion of stock market would not last long soon and we will see the next phase of the market in coming weeks.
Since the opening of the market, bulls are trying to break above the resistance while bears are holding their belt tight not losing. For all major indexes, almost it is a flat day which indicate the balance of bulls and bears. S&P still cannot close above 1400 mark yet while it does trading higher intraday. Most likely, market is waiting to see how the Fed rating decision on Wednesday and we will have the important non-farm payroll, unemployment index announce on Friday.
Today, Morgan Stanley see big bank woes just beginning.."More capital hikes and dividend cuts are coming as our credit deteriorates and forward earnings decline" analysts led by betsy Graseck wrote in a report. "We think we are only in the third inning of the credit cycle and expect this credit cycle will be worse than the slump in 1990-01". Well, I mostly agree with the Morgan Stanley's analysis but I think it is going to be much worse since post-war period ( or even as same as the great depression time ). Do not let the market makers/traders to trick you with the recent rally, you would regret it later for sure to participate this fake rally. This upward motion of stock market would not last long soon and we will see the next phase of the market in coming weeks.
Sunday, April 27, 2008
Recovery?
4/27/08
Investors may wonder how the market can possibly rally when economy is hanging on the ropes of death. The big money is not betting on the economy it is betting on inflation. Investors and financial markets response to low interest rates from the Fed is to borrow all that they can invest in real assets in anticipation of rising prices. This makes the demand for real assets exceeds supply, driving up prices...and the next asset bubble is born. Nowsday, it is so obivous that the housing bubble collapse and still fresh, there are only two viable alernatives, stocks and commodities.
Last friday, market reported that consumer sentiment fell to 62.6, the lowest level since 1982. However, major indexes are closing in highs of the week. Low volumes rally indicate the rally does not result from buying pressure, rather from the absence of sellers and this give us warning to proceed with caution. Particular, S&P is closing in heavy resistance area 1395-1410(200days ma is 1407) If S&P could close above this area long enough, the market would propel higher for sure.
The Fed interest meeting is coming at Wednesday, and market expect quarter point cut only. This would be another test to see if market could go higher afterward.
Investors may wonder how the market can possibly rally when economy is hanging on the ropes of death. The big money is not betting on the economy it is betting on inflation. Investors and financial markets response to low interest rates from the Fed is to borrow all that they can invest in real assets in anticipation of rising prices. This makes the demand for real assets exceeds supply, driving up prices...and the next asset bubble is born. Nowsday, it is so obivous that the housing bubble collapse and still fresh, there are only two viable alernatives, stocks and commodities.
Last friday, market reported that consumer sentiment fell to 62.6, the lowest level since 1982. However, major indexes are closing in highs of the week. Low volumes rally indicate the rally does not result from buying pressure, rather from the absence of sellers and this give us warning to proceed with caution. Particular, S&P is closing in heavy resistance area 1395-1410(200days ma is 1407) If S&P could close above this area long enough, the market would propel higher for sure.
The Fed interest meeting is coming at Wednesday, and market expect quarter point cut only. This would be another test to see if market could go higher afterward.
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