Market Discussion

[BigSully1]

Bernanke opted to say he's ready to cut rates aggressively. I hope "don't fight the FED" works and the current rally holds.

Got to go pick up my kids from school, have a nice day

I somehoew missed that. I thought he wasn't scheduled to speak until 1800 GMT which I calculated to be 2:00 p.m. CST. Am I wrong?

[David Randolph]

I somehoew missed that. I thought he wasn't scheduled to speak until 1800 GMT which I calculated to be 2:00 p.m. CST. Am I wrong?

There was an information leak to Reuters

[terainvestment]

Hi DAVID,

in your 2008 plan you announced that you will build a portfolio of 12 stocks, one for each month. I think is a great idea that will improve the operations of your site and attract new prospects, with an higher chance to convert them into subscribers and increase this great community.

So, when do you think to begin building this new portfolio?
I am very curious and probably other members also are.

Thanks and keep up with your great work, no one here cares about daily ups and downs of this crazy market! :-)

[la-onda]

 
as always from IV:

Old Fool Notes - 01/10/08

We had another wild and interesting day today.  Down at the open, then up hard with a bit of fade at the end.  Volume was high at 2.6 billion and the volume ratio was 2.0 to 1 in favor of the bulls.  Considering the overall action - about average efficiency.

Doggone - we have two days of up action in the daily channel chart.  Unfortunately, the bears still have the channel but it is interesting to note that  the low spike and high spike are setting the channel boundaries.  The bulls are fighting their way out of a BIG hole and tomorrow is very important.  The bulls need a positive day.

The hourly charts reclaimed a resistance level today and the indicators look good.  Lots of work to do for the bulls.

The ratio chart gained some ground and is looking better.  Note that the indicators show that it has visited bottoming territory.  Still very soon for a call either way.

The weekly chart needs another 16 points to turn a green week - and we really need it.  Bears still in control but in bottoming territory.

The Wilshire, once again, outperformed the NAZ.  It is now OBV positive and that is VERY good news.

The P&F chart turned in 9 Xs today - very strong rebound.  2700 is resistance so expect some more up and down - but this is a positive move.

I was stopped out this morning at 2450 and went back long 25% QLD at 2460.  Not bad, not great.  Still holding with a stop at 2475.  This market is a conundrum - we had some really big boys in both buying and selling today.  There are clearly two distinct points of view on the future.  I posted a bottoming chart earlier and Snap took a head and shoulders exception.  Maybe so - but I am inclined to look at other indicators.  Like a 3 year low in 200-day lows and BPI - those indications are hard to ignore.  We will see - but I do know we are on a razors edge.  I have been feeding LT money in slowly over the past two days and will continue to do so on any dips.  I have been focusing on the financials, internationals, drugs and blue chips.  My 40 years of experience suggests that this is a successful approach for anyone that thinks long term.  At the same time the TP is only 25% long.  Follow the ball!!

Charts link below - I sure do appreciate the voting support over at SC.  Shoot, I may collect another $25 credit if you guys keep banging those votes up.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2071209 

[BigSully1]

Brutal   

Trend-line broken.

Next trendline (which I can't get on Stockcharts) going back 5 years brings us to around 2230 on the Nasdaq.

Agreed, brutal.  The broken trend line made me reconsider some things. 

I sold all US holdings except for GSB, the rest remaining are my Chinese or Israeli holdings.  And for those remaining that I havent held long, I will consider dropping for now and looking for better entries. 

CIMT for example though I know I wont sell no matter what, I have almost held that a year and it is doing well despite the market downturn.

Looking at the chart you posted, would you agree that the three labeled peaks on the right side now look like a head and shoulders pattern which just broke to the downside (and through a major trend line a that)?

I think you did the right thing Tokyo. I'm pretty sure IBD will now take a corrective mode posture from their "rally under pressure" one. They have already been saying for some time that you shouldn't be fully invested, to be careful entering into new positions and be quick to cut losses.

I've cut only a few holdings, but instead have gone on margin to hedge with ultrashorts late last year. That is the only time I ever use margin and feel safe doing so for that purpose. But It may be time to consider selling more longs and becoming "net short"

I think the only thing that can probably turn this around now would be a surprise early interest rate cut of .5 BEFORE the end of month. I think it might be a possibility.

[/quote]

About ReutersInter-meeting US rate cut speculation grows-source
Fri Jan 11, 2008 1:21pm EST 
NEW YORK, Jan 11 (Reuters) - Expectations for a U.S. interest rate cut before the U.S. Federal Reserve meets at month-end rose on Friday after influential think tank Medley Global Advisors told clients they expected a cut could come as early as next week, a source told Reuters.

"Medley was out this morning saying they were looking for a cut early next week," said a source who has a copy of the report.

"The stock market though isn't really moving on this and pretty much after what (Federal Reserve Chairman Ben) Bernanke said yesterday, a 50 basis point cut is in the cards. He's definitely prepped the market for it," the source added.

The Fed, which has lowered the benchmark federal funds rate by 1 full percentage point since mid-September to stave off a full blown recession, will meet for two-days Jan. 29-30. The benchmark fed funds rate now stands at 4.25 percent.

On Thursday, Bernanke acknowledged the U.S. economy faces increased risks and indicated the central bank was ready to cut rates aggressively to support growth.

Short-term interest rate futures have fully priced a 50 basis point rate cut by the end of January, and on Friday rallied further to suggest as much as a one-in-three chance that the Fed could lower rates by 75 basis points.

U.S. Treasury yields were slightly lower on the day. The two year note <US2YT=RR> was up 4/32 of a point in price for a yield of 2.625 percent, versus 2.70 percent late on Thursday.

Benchmark U.S. stock market indexes were down in midday trade. The Dow Jones industrial average .DJI was off 1.35 percent while the Standard & Poor's 500 stock index .SPX was down 0.69 percent, reflecting the grim outlook for the U.S. economy. (Reporting by Daniel Bases; Editing by Diane Craft)

[kslifka]

Brutal   

Trend-line broken.

Next trendline (which I can't get on Stockcharts) going back 5 years brings us to around 2230 on the Nasdaq.

Agreed, brutal.  The broken trend line made me reconsider some things. 

I sold all US holdings except for GSB, the rest remaining are my Chinese or Israeli holdings.  And for those remaining that I havent held long, I will consider dropping for now and looking for better entries. 

CIMT for example though I know I wont sell no matter what, I have almost held that a year and it is doing well despite the market downturn.

Looking at the chart you posted, would you agree that the three labeled peaks on the right side now look like a head and shoulders pattern which just broke to the downside (and through a major trend line a that)?

I think you did the right thing Tokyo. I'm pretty sure IBD will now take a corrective mode posture from their "rally under pressure" one. They have already been saying for some time that you shouldn't be fully invested, to be careful entering into new positions and be quick to cut losses.

I've cut only a few holdings, but instead have gone on margin to hedge with ultrashorts late last year. That is the only time I ever use margin and feel safe doing so for that purpose. But It may be time to consider selling more longs and becoming "net short"

I think the only thing that can probably turn this around now would be a surprise early interest rate cut of .5 BEFORE the end of month. I think it might be a possibility.

About ReutersInter-meeting US rate cut speculation grows-source
Fri Jan 11, 2008 1:21pm EST 
NEW YORK, Jan 11 (Reuters) - Expectations for a U.S. interest rate cut before the U.S. Federal Reserve meets at month-end rose on Friday after influential think tank Medley Global Advisors told clients they expected a cut could come as early as next week, a source told Reuters.

"Medley was out this morning saying they were looking for a cut early next week," said a source who has a copy of the report.

"The stock market though isn't really moving on this and pretty much after what (Federal Reserve Chairman Ben) Bernanke said yesterday, a 50 basis point cut is in the cards. He's definitely prepped the market for it," the source added.

The Fed, which has lowered the benchmark federal funds rate by 1 full percentage point since mid-September to stave off a full blown recession, will meet for two-days Jan. 29-30. The benchmark fed funds rate now stands at 4.25 percent.

On Thursday, Bernanke acknowledged the U.S. economy faces increased risks and indicated the central bank was ready to cut rates aggressively to support growth.

Short-term interest rate futures have fully priced a 50 basis point rate cut by the end of January, and on Friday rallied further to suggest as much as a one-in-three chance that the Fed could lower rates by 75 basis points.

U.S. Treasury yields were slightly lower on the day. The two year note <US2YT=RR> was up 4/32 of a point in price for a yield of 2.625 percent, versus 2.70 percent late on Thursday.

Benchmark U.S. stock market indexes were down in midday trade. The Dow Jones industrial average .DJI was off 1.35 percent while the Standard & Poor's 500 stock index .SPX was down 0.69 percent, reflecting the grim outlook for the U.S. economy. (Reporting by Daniel Bases; Editing by Diane Craft)

[/quote]

I was thinking the same thing BigSully.

We'll probably get a short-term double bottom next week...and a sharp rally...especially if the Fed Cuts rates ahead of the FOMC meeting in late January.

[elliemae]

Time to go long, which I did today.  Way too much pessimism and all the talking heads keep pushing healthcare, utilities, and consumer staples (since when have they ever been right on market direction?  They only call what has happened, not what will happen!!).  If the market gets 1 piece of good news (surprise rate cut), it will fly.

[la-onda]

shadowtrader update:
http://www.shadowtrader.net/videos/sunday011308st.html

cheers
O.

[la-onda]

fyi:
Old Fool Notes – 01/14/08

The bulls had a pretty good day today.  They fought when they needed to fight and they retreated when they needed to retreat.  Now – can they put a few together?  The volume was 2.1 billion (down a bit) with a ratio of 3.0 to 1.  Good efficiency on the bull's side today.

The daily channel chart is still in the bear hug but shows a nice bottoming pattern setting up.  On the other hand, there is still a bunch of work ahead.  The indicators are still weak and need several up days to recover.  I will feel much better when 2500 is taken.

The hourly chart is significantly improved.  I mentioned 2500 above but it is clear from this chart that 2520-2525 is the critical area.

Our ratio chart was perking up nicely intraday but ended down a bit.  Not good because we need more confidence from the options boys.

The weekly chart is still in trouble but an up week would go a long way in fixing it up.

The Wilshire chart is also building a nice bottom pattern.  In addition, the OBV went back positive.  Just a little more upward move would build some serious MoJo.

The P&F chart is back into neutral position but has a positive pattern.  It is suggesting that the 2510-2520 area is critical.

I had two buys of QLD today – the first for 15% at 2462 after the morning dip and the second 15% at 2466 on the after lunch move.  My stop is at 2466.  If we keep pushing up, I'll add at 2490, 2500 and 2510.  I'll push the stop along and let it take care of the downside.  According to the bottoming chart I posted yesterday, this could turn into a decent move.  We will see.  The low volume today clearly shows that the bulls are not in a big rush.  It's all about news and earnings at this point.

Charts link below – thanks for the votes, we are holding position.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2071209

[kslifka]

We need to get some buyers in down here...to get a "tweezer bottom"...and a bounce.

Is this capitulation....hmmm 

[mbaugh]

Hello, I felt the urge to let out a big frustrating "SCREAM"


Thanks, I feel better!

[pinoleropuro]

I guess I was right about that upsidedown W formation.
yikes!!!

upside down W formation?
http://books.google.com/books?id=Xu1QwIwCJdQC&pg=PA626&lpg=PA626&dq=upside+down+w+formation&source=web&ots=H6IGvhTMt8&sig=9DKvfVnf4IEWyCrSZEOp7HY-kCE
When a Relative Strength Index Line spikes down and penetrates 30 on the Index Scale, then moves up, then is followed by another down spike (less than the first), a buby signal is generated as the index line rises to a level equal to the middle of the "W" Formation. A sell signal appears in a similar manner, but spiking up rather than down (an upside down "w"), above 70 on the index scale.

[kslifka]

I guess I was right about that upsidedown W formation.
yikes!!!

upside down W formation?
http://books.google.com/books?id=Xu1QwIwCJdQC&pg=PA626&lpg=PA626&dq=upside+down+w+formation&source=web&ots=H6IGvhTMt8&sig=9DKvfVnf4IEWyCrSZEOp7HY-kCE
When a Relative Strength Index Line spikes down and penetrates 30 on the Index Scale, then moves up, then is followed by another down spike (less than the first), a buby signal is generated as the index line rises to a level equal to the middle of the "W" Formation. A sell signal appears in a similar manner, but spiking up rather than down (an upside down "w"), above 70 on the index scale.

You say an upside down "W"...I think it's looks more like an "M"...hehe.

Seriously...the ratio of Up Stocks to Down Stocks is like 1/10...we need some buyers to step in. 

[kslifka]

INTC missed guidance.  Down 14% after hours.

Could be brutal tomorrow.

[David Randolph]

I guess that what we'll get now will be something similar ... perhaps we'll break down through the $137 support on a crazy gap down ... it will be extremely scary and almost impossible to hold on to your shares ... a year from now, with the market 20% higher, almost nobody will remember it, like almost nobody remembers the 2004 break.

This is my view of future events, I can be wrong.

The sooner we break down below $137, the better.

I expect that in the $135 area we'll get many bearish articles from all sources, many saying there's nothing the FED can do at this point. They'll go even deeper and write that the current economic situation is all the FED's fault, because it didn't make its supervision job right, because rates were too high or because rates were too low.

In the $135 area, you'll have almost an unanimous consensus that the US economy is headed for a recession or is in one already.

Also in the $135 area, market timers will tell that this market will have another 20-30% fall and all technical analysts will be bearish.

It will be amazing what a mere $2, or about 1.5%, will do to market sentiment.

That will be the bottom and we'll close the year above $170, that is, up 26% from that bottom.

This is my view of future events, I can be wrong.

INTC missed guidance.  Down 14% after hours.

Could be brutal tomorrow.

Exactly what we needed. The sooner we clean up the weak hands the better. Thanks for the information kslifka