7/16/08
SEC announced a restriction of shorting 19 financial stocks late afternoon yesterday and crude oil future continued sell off 2nd day in a row are both big factor to play today biggest banking sector rally in 16 years and DOW ended up 278 points. Technically, major indexes are now forming bullish reversal morning candlestick pattern ( 7/14/08, 7/15/08 and today 7/16/08 a 3 day pattern) to end this horrible downtrend selling since 5/22/08. Although financials are finally bottomed, the market will have another pull back soon to retest. I do not believe this is another V shape reversal back up because few technicals are not in reversal signals zone to confirm this turnaround. Also, this just happened before the option expiration Friday. Also, major indexes are facing the resistance downtrend line to break in order to climb higher. So, it is huge rally and S&P did have heavy volume yesterday to hammer this bottom. But I am not so convinced yet we are ready to turnaround from here. I suspect the market need kinda double bottom or make a divergence signals on indicators to make this down shift gone. Moreover, need to test the sentiment if more bad news cannot hurt the Bulls. Tomorrow morning, JPM will post earning and MER will announced too after market close. C will be showing their number before market open on friday. Even SEC restricts shorting financial stocks, it does not mean there appear any big buyers rushing in and make this turnaround. Insolvency cannot be taken care by these rule and I am sure there would be another selling wave of financials in the very near future. Folks, trade short term with financials is fine but do not own them in long run. I do not think their fundamental has changed.
Wednesday, July 16, 2008
Tuesday, July 15, 2008
Bleeding but no bloody yet
7/15/08
The volatility continues in this market in the Option expiration week trading. The DOW was gapped down more than 100 points at the open and sold off to as much as down 260 points. S&P sinked all the way to exact 1200 mark. Then, the market started to rally and reverse the red loss into green as high as 70 points gain in DOW. There were two major reason for the rally are oil and finance. Crude oil future has the largest one day drop in years. Banking and Finance reversed drop into little gain for a very short time. However, the market sold off into the close and ended up with 92 points. This is the third day in a row the market has attempted to rally but failed. The VIX did spike over 30 but not in extreme fear yet. The major support levels on the S&P is 1206 and next down is 1178 area. FNM & FRE both fell more than as much as 25% as the bailout plan makes it clear that equity shareholders are not getting anything. The both closed at $7.07 and $5.26 respectively. If financial and banking have not find the bottom, FNM & FRE are going to under $1 soon. The markets are still not bottom yet. It is very very ugly. But I laugh out loud on whoever so called experts had said we will have summer rally. Well, What is the point if market has already substantially down from all time highs and rally up. Also, Bernanke doubly worried the inflation as well as the threat to growth in the testimony today. Are we having the ugliest summer to get started? If history does repeat, the market might have gotten into bearish continuing seesaw though the end of September. Oh, forget to mention lots of banking stocks are making new fresh lows again. Do not own any financial or banking stocks if you are not trading in very short term. They have long way to go all way down to one digit territory. Moreover, the DOW 11000 is broken. It did not surprise me as I had that vision very early this year. Next support would be around 10750.
The volatility continues in this market in the Option expiration week trading. The DOW was gapped down more than 100 points at the open and sold off to as much as down 260 points. S&P sinked all the way to exact 1200 mark. Then, the market started to rally and reverse the red loss into green as high as 70 points gain in DOW. There were two major reason for the rally are oil and finance. Crude oil future has the largest one day drop in years. Banking and Finance reversed drop into little gain for a very short time. However, the market sold off into the close and ended up with 92 points. This is the third day in a row the market has attempted to rally but failed. The VIX did spike over 30 but not in extreme fear yet. The major support levels on the S&P is 1206 and next down is 1178 area. FNM & FRE both fell more than as much as 25% as the bailout plan makes it clear that equity shareholders are not getting anything. The both closed at $7.07 and $5.26 respectively. If financial and banking have not find the bottom, FNM & FRE are going to under $1 soon. The markets are still not bottom yet. It is very very ugly. But I laugh out loud on whoever so called experts had said we will have summer rally. Well, What is the point if market has already substantially down from all time highs and rally up. Also, Bernanke doubly worried the inflation as well as the threat to growth in the testimony today. Are we having the ugliest summer to get started? If history does repeat, the market might have gotten into bearish continuing seesaw though the end of September. Oh, forget to mention lots of banking stocks are making new fresh lows again. Do not own any financial or banking stocks if you are not trading in very short term. They have long way to go all way down to one digit territory. Moreover, the DOW 11000 is broken. It did not surprise me as I had that vision very early this year. Next support would be around 10750.
Monday, July 14, 2008
Bearish Continuation pattern
7/14/08
Well, well, the fed and treasury both cannot save the day today as Dow still down 45 points after retest the 11000 area. Major indexes are still trading in downward channel in 15 mins chart and still keep in bearish continuation pattern. Today, all regional bank stocks are getting fire sale. The last friday news of Indymac bank failure has affected other big regional banks nationwide. This is another new banking crisis just start as I wrote about that very early this year. FDIC has a failure list of compose over 300 banks. Believe it or not, the IMB(Indymac is not even in the list). Look like the market cannot turnaround if the financial and banking keep rolling downward sharply. Despite some technical indicators are posting extreme oversold level and ready to reverse, the market participants hate the uncertainty. Also, the Fed has no ammo left to lift the spirit up(That's I said it early few months ago too). The earning seasons is in play now. The C, MER,...are going to report this week. I still keep very very bearish as of today. No bottom signal yet.
Well, well, the fed and treasury both cannot save the day today as Dow still down 45 points after retest the 11000 area. Major indexes are still trading in downward channel in 15 mins chart and still keep in bearish continuation pattern. Today, all regional bank stocks are getting fire sale. The last friday news of Indymac bank failure has affected other big regional banks nationwide. This is another new banking crisis just start as I wrote about that very early this year. FDIC has a failure list of compose over 300 banks. Believe it or not, the IMB(Indymac is not even in the list). Look like the market cannot turnaround if the financial and banking keep rolling downward sharply. Despite some technical indicators are posting extreme oversold level and ready to reverse, the market participants hate the uncertainty. Also, the Fed has no ammo left to lift the spirit up(That's I said it early few months ago too). The earning seasons is in play now. The C, MER,...are going to report this week. I still keep very very bearish as of today. No bottom signal yet.
Sunday, July 13, 2008
History repeats itself
7/11/08
I still do not see any bottom sign. The market had a very volatile session. The Dow had registered the mark 11,000 before the News hit the wire that both FNM and FRE can use the discount window. Then the market has gain short lived rally to positive before it closed down 125 points. The Fed and Treasury both shore up FNM and FRE over the weekend. Hopefully, it could boost the market up on Monday in order to confirm the Friday candlestick reversal pattern.
History repeats again that Fed rescue FNM and FRE like BSC. Also, the timing of this Bear market swing like in year 2001. Let me share one of the similarity of index swing of S&P. For timing date,
1. 1/31/2001-3/22/2001, down 50 days with 302 points; 2/1/2008-3/17/2008, down 45 days with 137 points.
2. 3/22/2001-5/22/2001, up 61 days with 235 points; 3/17/2009-5/22/2008, up 63 days with 183 points.
3. 5/22/2001-9/21/2001, down 122 days with 371 points; 5/22/2008-?/?/???? unknown.
From that, we could see how strong the timing of the up and down swing of S&) for both bear markets. They are almost the same for the period of month of Jan-May. Here is the main point that after the month of May, the down trend lasted 4 months in year 2001 with 371 points. So, here is the question on coming. When would this down trend swing ended?? We will see.
I still do not see any bottom sign. The market had a very volatile session. The Dow had registered the mark 11,000 before the News hit the wire that both FNM and FRE can use the discount window. Then the market has gain short lived rally to positive before it closed down 125 points. The Fed and Treasury both shore up FNM and FRE over the weekend. Hopefully, it could boost the market up on Monday in order to confirm the Friday candlestick reversal pattern.
History repeats again that Fed rescue FNM and FRE like BSC. Also, the timing of this Bear market swing like in year 2001. Let me share one of the similarity of index swing of S&P. For timing date,
1. 1/31/2001-3/22/2001, down 50 days with 302 points; 2/1/2008-3/17/2008, down 45 days with 137 points.
2. 3/22/2001-5/22/2001, up 61 days with 235 points; 3/17/2009-5/22/2008, up 63 days with 183 points.
3. 5/22/2001-9/21/2001, down 122 days with 371 points; 5/22/2008-?/?/???? unknown.
From that, we could see how strong the timing of the up and down swing of S&) for both bear markets. They are almost the same for the period of month of Jan-May. Here is the main point that after the month of May, the down trend lasted 4 months in year 2001 with 371 points. So, here is the question on coming. When would this down trend swing ended?? We will see.
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