Market Discussion

[tokyopua]

Actually I think today could be the rally confirmation day already in the IBD definition, no need to worry about tomorrow. 

I wrote below that the follow through day was supposed to be after 4 days, but the more I think about it that doesnt make sense, its probably WITHIN 4 days.  I will post whatever IBD has to say in their Big Picture article later today, but this looks really good for the market (well, except there are some gaps up today that might get filled, but still good).  I bet that IBD will say tonight that we are in a confirmed rally.

[kslifka]

it looks like we have a strong up trend, so technically tomorrow could be a key reversal day. Iin order for it to be a key reversal day we need higher volume for it to be a strong signal and then we all need to be long. If this does not happen this could possibly simply be a short market rally. I hope that is not the case.

A nice day indeed...   It looks like the bottom has been set.  Today's action was probably alot of short covering...like I was expecting. 

We'll probably have another strong down day or two early next week...as we test (or get close) to the lows set earlier this week....but after that..from my experience we should move higher to close the year.  If you look at charts of of the markets from the past...we rarely trade sideways near the bottoms.

[terainvestment]

I know technical issues are important, but give a look at today top news:

1) wells fargo takes 1.4 Bln in losses
2) Existing Home Sales Fall for Eighth Straight Month
3) Fed: Economy Loses Speed, Shopping Slows
4) Bear Stearns Cuts 4 Percent of Staff
5) Wolseley to Cut 1,300 More US Jobs
6) Credit Crunch Slows Private Equity Firms

and mr. Market what does?
up 3%.

I think the worse is back, hopefully no more write offs coming.

Today I read an interesting report issued by a top private banker that affirm that US stocks are extremely undervalued at these prices, at an average of 42.2%.

The problem now is the weak dollar and a possible flowing out of money from US stock markets to other booming markets.

time will tell, stay tuned :-)

[ygtrdr]

Weak dollar is bullish for US equities.

[Houlahan]

I don't like the the selling pressure into the close the past few weeks.  This has got to change to reverse the downtrend.

But...I believe there will be one hell of a short squeeze coming this week. 
Maybe even tomorrow.

Applaud! You called it correctly. 

[kslifka]

I know technical issues are important, but give a look at today top news:

1) wells fargo takes 1.4 Bln in losses
2) Existing Home Sales Fall for Eighth Straight Month
3) Fed: Economy Loses Speed, Shopping Slows
4) Bear Stearns Cuts 4 Percent of Staff
5) Wolseley to Cut 1,300 More US Jobs
6) Credit Crunch Slows Private Equity Firms

and mr. Market what does?
up 3%.

I think the worse is back, hopefully no more write offs coming.

Today I read an interesting report issued by a top private banker that affirm that US stocks are extremely undervalued at these prices, at an average of 42.2%.

The problem now is the weak dollar and a possible flowing out of money from US stock markets to other booming markets.

time will tell, stay tuned :-)

Terainvestment....this is what we've been waiting for.  Stocks going up even with bad news.  This means...for the most part all of this horrendous news is priced in.  Look at Wells Fargo...It was up today even with the bad news. 

The housing crunch has been known for a long time...to the market it's old news.   

The layoffs at the big brokerage firms had been speculated since October...now it wouldn't be good if we see layoffs hitting other parts of the economy...but so far it hasn't.

And the dollar versus the yen seems to have found a bottom...

The market was looking for a reason to rally today...but the December interest rate cut had already been anticipated....this is why I don't see clear skies ahead quite yet.   We'll probably have another one or two sharp sell-offs...(If I see a hammer coming on one of these down days...I will jump in with both feet.) 

In my mind we're getting close.

[tokyopua]

Actually I think today could be the rally confirmation day already in the IBD definition, no need to worry about tomorrow. 

I wrote below that the follow through day was supposed to be after 4 days, but the more I think about it that doesnt make sense, its probably WITHIN 4 days.  I will post whatever IBD has to say in their Big Picture article later today, but this looks really good for the market (well, except there are some gaps up today that might get filled, but still good).  I bet that IBD will say tonight that we are in a confirmed rally.

Well, my optimism was a bit premature, IBD still considers this a correction, though it did call it Day 2 of a rally attempt.  Of course, in the same vein, they didnt call it a correction till we were already something like 6% off the highs so they try to be pretty sure before they call a spade a spade it seems. 

Some interesting points in the article.

-------------------------
THE
BIG PICTURE        Stocks Rally, Stage Rare Up Day In Higher Volume

More Credit Woes Send Major Indexes To New Lows

Retailers, Banks Lead Black Friday-Shortened Gains

Stocks Tumble Again Ahead Of Holiday


Stocks Surge Again On Top Fed Official's Comments
BY JONAH KERI

INVESTOR'S BUSINESS DAILY

Posted 11/28/2007

Stocks surged in higher volume Wednesday, rallying for the second straight session.

Fed comments hinting of more interest-rate cuts sparked the market, which got an added lift from another tumble in oil prices and a rally by financials.

The Nasdaq jumped 3.2%, doubling the size of Tuesday's advance. The Dow industrials bounced 2.6%, the NYSE composite 2.8%. The S&P vaulted 2.9%.


Volume perked up across the board.

Wednesday offered several encouraging signs for investors. But each one must be taken with a grain of salt, given the lessons taught to us by market history.

The Federal Reserve's No. 2 official, Donald Kohn, issued comments that hinted at a rate cut at the Fed's Dec. 11 meeting. The key fed funds rate currently stands at 4.5%, after rate cuts in September and October.

The last two times the Fed cut rates, the stock market cheered. The Nasdaq jumped 2.7% on Sept. 18 and 1.5% on Oct. 31. But the market couldn't sustain its gains after the second cut, as Oct. 31 proved to be the day the Nasdaq peaked.

Investors also reacted to a second consecutive big drop in oil prices on Wednesday. A smaller-than-expected drop in crude oil and distillate supplies helped shove January crude down $3.80 to $90.62 a barrel.

But oil prices' direction doesn't always provide a reliable indicator of the market's trend either. Stocks rallied for much of the year amid a steady uptick in oil prices.

Wednesday's price gain was one of the biggest of the year for the Nasdaq, an encouraging sign. But one big day doesn't mean much in the grander scheme. The Nasdaq's nine biggest up days of all time all occurred during the bear market of 2000 to 2003.

More recently, the Nasdaq's biggest up day of this year came on Nov. 13 — right before the market started a new leg down.

For now, consider Wednesday to be Day 2 of a rally attempt by the major indexes. We'll need to see more signs of strength among both the broad indexes and leading stocks before the market can take on a more bullish hue.

Top-rated stocks offered some encouragement. The IBD 100 soared 4.5%, marking one of its biggest up days of 2007.

The list of highly rated stocks gaining ground in brisk volume included big-cap leaders such as Amazon.com, (AMZN) Google, (GOOG) MasterCard (MA) and BlackRock, (BLK) as well as a bevy of mid-cap winners.

Elsewhere, Wells Fargo (WFC) said late Tuesday it would take a $1.4 billion write-down in Q4 for defaults. That was seen as a sign that subprime damage may be easing.

The Fed's beige book was gloomy but the market has seen positive signs elsewhere. For example, U.S. commanders are seeing significant progress in Iraq.

[kpunarc]

SPY still has a gap that may need to be filled...between 142.5-144. Something worth noting...

[terainvestment]

Weak dollar is bullish for US equities.

Weak dollar is bullish for US equities?
Sure?
I am an Italian investor, so my currency is Euro. If I invest in US stock market, my investment currency becomes US/$. Say that I invest in a US stock that in one year gains 10%. If the $ goes down 15% in that year (as it did), my total return on investment will be: 10% - 15% = - (minus) 5%

So, money flows where the currency are strong, not where are weak! :-)
The currency reflect the "state of health" of a country. Do you think that US is in good health for the long term?

[pinoleropuro]

that is why I am thinking we may get an injection of liquidity at the discount window but not really another rate cut. if I am correct that could be a disappointment for the short term but great for the long term.
any thoughts?

[terainvestment]

another cut rate on $ only will get the effect to weakening again the US only.
The problem is that you Americans (I love American people) are paying the dysaster of Iraq war that caused the public debt to explode to never seen levels.

I think US fallen down in a huge trap: you have been attacked on 2001 by...by who? Bin Laden?
Then US reacted, declared war to Afghanistan and Iraq with the goal to establish a beach head in the Middle East to get oil, but you failed.

At this point, man with long beard and women with burka became pretty annoyed to have US people on their "ass" (sorry for the bad word). They sit on billions of oil gallons, so who cares about USA?
Oil price started and went up, then skyrocketed and huge quantity of money were drained from your wallets to Arabian wallets...

Then the last shot: the Arabian already own the 7% of "corporate America", so they are full informed of what goes well and what goes bad....and the bad was the subprime exposure and the bubble on real estate.
Just a needle, here and there and the bubble exploded...financial collapsed, and then came back again the Arabian and so what?
The US finance is moving from Jewish people to Arabic people.

Guys: what we are seeing now is an all of the time changement, the third world war fighted only with money.

[ygtrdr]

Weak dollar is bullish for US equities.

Weak dollar is bullish for US equities?
Sure?
I am an Italian investor, so my currency is Euro. If I invest in US stock market, my investment currency becomes US/$. Say that I invest in a US stock that in one year gains 10%. If the $ goes down 15% in that year (as it did), my total return on investment will be: 10% - 15% = - (minus) 5%

So, money flows where the currency are strong, not where are weak! :-)
The currency reflect the "state of health" of a country. Do you think that US is in good health for the long term?

Hi terrainvestment

Let me ask you this:

Do you think the sovereign wealth funds, with trillions of dollars in reserves, are going to primarily be buying expensive assets, or cheap assets? The US is on sale right now, whether that is good or bad is debatable but we are the worlds largest, most diversified economy and I have no doubts that Abu Dhabi deal with Citi is just the beginning of the large amounts of foreign reserves that will be pouring into our economy. Investment into our economy is bullish for equities. Just like in the 80's with the japanese.

[David Randolph]

Do you think the sovereign wealth funds, with trillions of dollars in reserves, are going to primarily be buying expensive assets, or cheap assets? The US is on sale right now, whether that is good or bad is debatable but we are the worlds largest, most diversified economy and I have no doubts that Abu Dhabi deal with Citi is just the beginning of the large amounts of foreign reserves that will be pouring into our economy. Investment into our economy is bullish for equities. Just like in the 80's with the japanese.

Arabian and Chinese money pouring into the US financial markets is just another evidence that globalization is working and good for everybody ... especially for the US. The creation of wealth elsewhere besides North America, Europe and Japan is not only good to sell those billions of people products, they invest in our countries too. Everybody wins when there are more rich people in the World. The wealth isn't merely transfered. It is created by the emergence of new markets and capitalist economies.

[terainvestment]

I totally agree with, please don't confuse on the fact that I am not bullish on US stock markets.
If I were not bullish, I would not use the margin right now.

What I was going to say is that a weak dollar causes the current undervaluation of US stocks to stay undervalued, that's it.

[terainvestment]

And I agree also with David. We are all saying the same thing, only from different point of views.

It's good to have different opinions that, at the end of the day, converge on the same goal: enjoy the creation of wealth for everybody, and not only for "privileged" and western people.