7/10/08
As expected, oil did not turn down or even has a significant correction but rather rebound $5.60 like it did over the past few months. But the Dow was up as well. However, it merely formed a bearish continuation pattern that tells me that it is an orderly decline. So, I do not see the bottom unless tomorrow it is very strong follow up day. Actually, FRE and FNM are in focus for this trading weeks and both stocks keep dropping like a rock. I do not want to repost what causes them sink. But we all know they are the backbone of the home mortgage practice entities and they are supposed back up mortgage loans made by all US banks. The major problem is now they both do not have enough capital to buy up all the loans(bad loans). They are leverage very very huge amount of money to buy and backup the loans. Now, all financial firms are deleveraging their whole books. But FRE and FNM are both keep leveraging up. This leverage will eventually kill them just like a margin call will kill an individual investor. So, US government cannot let them fail. If either one of them fails, the US housing market will crash and it must brings us into very very long haul depression. Also, without the backing, banks will be reluctant to lend any money to potential home buyers. Then less and less buyers means equal to more home price correction. It is very common sense and simple. In order to bail out both, we are talking about trillion US$ worth of potential bailout amount in any forms(actually, now those trillion mortgage back securities are garbage). If the Fed/Treasury/Government do bail out, end result will be US$ goes much much lower, Housing market goes lower, US government's credit rating will drop, other countries that hold US treasury/bond will be very disappointed and might threaten to dump it to cut the loss, Mortgage industry must needs to go into a reform, and we as americans's tax $$ got ripped off again. What a worst result!!
Today, Treasury Secretary Henry Paulson told congress that Banks should not expect to be bailed-out by government, despite intervention by the Federal Reserve in the near-collapse of Bear Stearns in March. Woo, cool. It means LEH, WM, MS, MER, C, .....stock value may go to single digits (well, WM is $5 now) soon and will file bankrupt. Well, that is the worst. Folks, now the Fed/Treasury/Government know that credit crunch aftermath are too big for them to bail out.(We are talking Trillion$) It is so obvious that Federal Reserve are out of any ammo or $$ to save any financial institutions because they just all tie up. They are just sitting, waiting and praying that inflation will not go higher and economy will get better and housing price will get stable. Yes, I am very very bearish. Remember, market still good to trade short term. No long term buy on any stocks currently. I mean NONE unless those are bear ETFs. Good luck for GE earning tomorrow. I am so bearish about tomorrow(friday) if GE gives another sad announcement, Oil higher and market will crash.
Thursday, July 10, 2008
Wednesday, July 9, 2008
Bear still in control
7/9/08
The market reverse the previous reversal days pattern with big bearish candlestick. The major indexes started out firm and bounced in narrow channel, tried to retest the highs on few occasions. Then it broke lower and ended up rolling down in last hour to lows for the day. The Dow was down nearly 237 points. The S&P down more than 29, and the tech down almost 60 points. As I said previous day that the reversal need follow through up days(more strength) to confirm, today it failed the test again. The Dow has been staying around 11150-11200(critical area) for the sixth days in a row. I am worried what if tomorrow this zone support got broken. Then the market would dive hard to new lows area. Next target zone would be 11000 or even down to 10750. Same sector the financial pulled down the market strength again, again and again. The market seems not too co-relate with crude oil future price. At least, not like previous few weeks as oil goes south, market goes north. Just to remember these days, one day does not make a trend reversal. Tomorrow, the central bank of england would probably hold the interest rate and it may make the USD more volatile than usual. Then GE will announced the earning before market open on Friday. Well, trend and sentiment are both still inline bearish. Let see if Bulls would show their strength tomorrow.
The market reverse the previous reversal days pattern with big bearish candlestick. The major indexes started out firm and bounced in narrow channel, tried to retest the highs on few occasions. Then it broke lower and ended up rolling down in last hour to lows for the day. The Dow was down nearly 237 points. The S&P down more than 29, and the tech down almost 60 points. As I said previous day that the reversal need follow through up days(more strength) to confirm, today it failed the test again. The Dow has been staying around 11150-11200(critical area) for the sixth days in a row. I am worried what if tomorrow this zone support got broken. Then the market would dive hard to new lows area. Next target zone would be 11000 or even down to 10750. Same sector the financial pulled down the market strength again, again and again. The market seems not too co-relate with crude oil future price. At least, not like previous few weeks as oil goes south, market goes north. Just to remember these days, one day does not make a trend reversal. Tomorrow, the central bank of england would probably hold the interest rate and it may make the USD more volatile than usual. Then GE will announced the earning before market open on Friday. Well, trend and sentiment are both still inline bearish. Let see if Bulls would show their strength tomorrow.
Tuesday, July 8, 2008
Financials recovery bounce
7/8/08
The markets has a volatile morning, pull back early afternoon and then rally very sharply at the end with financial sector short covering rally. The tech index(nasdaq or nsadaq 100-NDX) complete highs of last 3 days. The Dow has formed 2 days reversal pattern with bullish engulfing and so is S&P also break out higher than yesterday close. The RSI of Dow has strength 31 with buy signal kick in. It is early to call this is the bottom of the market. First, VIX or Puts/calls ratios not spike in fear zone and reverse. Second, NYSE new lows/new highs not really commit in reverse too. But the institutional selling seems to be done. I consider today's rebound as an oversold rebound with bias positive. Need to see more strength to post this is indeed a reversal/bottom. The crude oil future continues selling off the lows of $135(which is close in the uptrend line zone). The horizontal support is $130-$131 area. So, if tomorrow the oil keep going down and break the $130 mark. It would be very positive for the market. Otherwise, the Dow 11440-11460, S&P 1290-1295 area would be the top ceiling of current rebound to overcome. After market, AA posted better than estimate earning and provide good strength for tomorrow.
The markets has a volatile morning, pull back early afternoon and then rally very sharply at the end with financial sector short covering rally. The tech index(nasdaq or nsadaq 100-NDX) complete highs of last 3 days. The Dow has formed 2 days reversal pattern with bullish engulfing and so is S&P also break out higher than yesterday close. The RSI of Dow has strength 31 with buy signal kick in. It is early to call this is the bottom of the market. First, VIX or Puts/calls ratios not spike in fear zone and reverse. Second, NYSE new lows/new highs not really commit in reverse too. But the institutional selling seems to be done. I consider today's rebound as an oversold rebound with bias positive. Need to see more strength to post this is indeed a reversal/bottom. The crude oil future continues selling off the lows of $135(which is close in the uptrend line zone). The horizontal support is $130-$131 area. So, if tomorrow the oil keep going down and break the $130 mark. It would be very positive for the market. Otherwise, the Dow 11440-11460, S&P 1290-1295 area would be the top ceiling of current rebound to overcome. After market, AA posted better than estimate earning and provide good strength for tomorrow.
Monday, July 7, 2008
Indecisive volatile session
7/7/08
Today started out with big gap up with crude oil future opened down almost $5. But the news of FRE & FNM (again the financials) dragged down the Dow & S&P to new lows before last hour technical oversold bounce. However, the rally did not last til the end. Both indexes gave up 50%, 38% respectively of the recovery points and ended slightly down. Also, we are still waiting to see the panic selling which it is still not happen so far. The VIX & Puts/Calls ratios are both not in fear zone. No confirm bottom yet. Look like we need to see more days. Everyday, indices oversold, breadth oversold, almost everyday the market would rebound from that but cannot last long enough to justify the bottoming. Tomorrow, the earning season kicks off by AA after market. Let see if AA would give us more clues about the market. Sentiment is still bearish for the market.
Today started out with big gap up with crude oil future opened down almost $5. But the news of FRE & FNM (again the financials) dragged down the Dow & S&P to new lows before last hour technical oversold bounce. However, the rally did not last til the end. Both indexes gave up 50%, 38% respectively of the recovery points and ended slightly down. Also, we are still waiting to see the panic selling which it is still not happen so far. The VIX & Puts/Calls ratios are both not in fear zone. No confirm bottom yet. Look like we need to see more days. Everyday, indices oversold, breadth oversold, almost everyday the market would rebound from that but cannot last long enough to justify the bottoming. Tomorrow, the earning season kicks off by AA after market. Let see if AA would give us more clues about the market. Sentiment is still bearish for the market.
Sunday, July 6, 2008
Another reversal sign with light volume
7/3/08
With only half trading day as of thursday, the volume is relatively less. Major indexes were formed another Doji star/hammer reversal candlestick signal. However, the VIX as well as puts/calls ratios were not in washout fear zone yet. Has the market bottomed? I think this week the market would give us a much clear answer since all traders/investors are back from vacation. Remember folks, we are in a bear market, and it is very dangerous to try to take positions anticipating the next rally only on the fact that the market is very oversold, triple bottom on S&P weekly charts and sentiment is lot of bearishness. SO, we need to see more signs to confirm this intermediate bottom reversal( one of example is crude oil future break down the trendline $135 and support $130). Here, I want to share how normal people would lose grip by believing so called economists, mutual funds managers, and stock analysts. The CNBC was publicly showing a survey back on May that over 70% mutual funds managers are bullish about US 2nd half economy would recover. Also, at the same time, most economists are confident that Fed rate cut with Bush stimulus package check would help US avert into recession. Oh, why now so called Wall Street professionals are turning more bearish because CNBC has been constantly reminding us of ALL MAJOR INDEXES are now DOWN more than 20% from their October highs?? But why as Technical Traders/Analysts and myself could notice this was a BEAR MARKET back to last December ( 6 months ahead of general public known what the hell is US stock market and economy going on? ) I am not to be proud of rising my bet or being superior. I am here to say that who's most care about your hard earn money? ( yourself, your own). I am not saying the stock brokers, mutual funds managers or financial professionals not good enough. I want to point out that you should put down some time to educate yourself about how to read charts, study basic technical stuffs to help pick your own winning investments vehicles. Get better timing about your own sense rather depend on most unreliable financial resources. I have chatted too much here today. Before I stop, I have found out interesting stuffs to predict the Dow movement one week ahead with chinese fengshi analytic ( cannot tell you the source). Monday, go down then close in green. Tuesday, down day. Wed, little up. Thur, another down. Friday, unclear, mostly little down. It did not tell the exact points but it does give indicate the direction of the day. Believe it or not that depend on you. Just a sharing only. Not recommand a trading signal.
With only half trading day as of thursday, the volume is relatively less. Major indexes were formed another Doji star/hammer reversal candlestick signal. However, the VIX as well as puts/calls ratios were not in washout fear zone yet. Has the market bottomed? I think this week the market would give us a much clear answer since all traders/investors are back from vacation. Remember folks, we are in a bear market, and it is very dangerous to try to take positions anticipating the next rally only on the fact that the market is very oversold, triple bottom on S&P weekly charts and sentiment is lot of bearishness. SO, we need to see more signs to confirm this intermediate bottom reversal( one of example is crude oil future break down the trendline $135 and support $130). Here, I want to share how normal people would lose grip by believing so called economists, mutual funds managers, and stock analysts. The CNBC was publicly showing a survey back on May that over 70% mutual funds managers are bullish about US 2nd half economy would recover. Also, at the same time, most economists are confident that Fed rate cut with Bush stimulus package check would help US avert into recession. Oh, why now so called Wall Street professionals are turning more bearish because CNBC has been constantly reminding us of ALL MAJOR INDEXES are now DOWN more than 20% from their October highs?? But why as Technical Traders/Analysts and myself could notice this was a BEAR MARKET back to last December ( 6 months ahead of general public known what the hell is US stock market and economy going on? ) I am not to be proud of rising my bet or being superior. I am here to say that who's most care about your hard earn money? ( yourself, your own). I am not saying the stock brokers, mutual funds managers or financial professionals not good enough. I want to point out that you should put down some time to educate yourself about how to read charts, study basic technical stuffs to help pick your own winning investments vehicles. Get better timing about your own sense rather depend on most unreliable financial resources. I have chatted too much here today. Before I stop, I have found out interesting stuffs to predict the Dow movement one week ahead with chinese fengshi analytic ( cannot tell you the source). Monday, go down then close in green. Tuesday, down day. Wed, little up. Thur, another down. Friday, unclear, mostly little down. It did not tell the exact points but it does give indicate the direction of the day. Believe it or not that depend on you. Just a sharing only. Not recommand a trading signal.
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