Market Soapbox 08/26/05
Resistance: DJIA 10750; SP500 1250; Nasdaq 2200; NDX 1625
Support: DJIA 10250 ; SP500 1200 ; Nasdaq 2050; NDX 1535
European & Asian markets split. Dollar down vs. Yen/Euro , XAU & gold bugs up, gold down, XOI down & oil up, commodities up, bonds up.
Today's Soohey Pig Award goes to me for letting the pig have a quiet day in its poke.
Monday a whipsaw day which ended barely up. Tuesday, a down day with little to cheer about other than utilities getting a bid from divident seekers.
Wend, started down then swung to the upside, when oil hit $67 a barrel all hell broke loose and the market went down big and fast.
Thurs, nothing to write home about as the market closed up slightly but large caps, MID & RUT were weak and hinting of what was to come.
Today, Greenspan called the housing boom an economic "imbalance", driving down the dollar and most asset classes with it.
A consolidation ensued, MID, RUT & SOX were beat like drums, coupled with Wend. performance, adding up to a down week and continuation of the pattern beginning August 2nd.
The markets failure to bounce up and make another run at the top has short positions which we were screaming for 7 days before August 2nd looking real sweet.
Aug 8th we advised on VIX/VXD Futures, those are also looking sweet as volatility has picked up nicely.
An investigation of 1 year indices chart patterns across the board reveals that the current down trend could play out by the end of August rather than September. The end of August needs to watched CLOSELY.
Observing the NDX, starting at the end of April, very clear 1 month wave durations occur.
The pattern calls for one more wave up, lasting one month and taking another swing at the peaks, followed by a short duration correction (much like Dec 04), then its downhill from there.
However, whether this occurs or not, depends on what vacationing traders worldwide decide to do upon their return Sept 1st. September is not traditionally a kind month for the markets.
As sellers take profits, returning traders could interpret the current level as a good consolidation base and "buying opportunity".
Others may just be buying on the "dips" as they see it. This could fuel the market for one more upwave through the end of September.
Looking at it another way, oil prices and bond markets are sucking the market dry. If August is any indication, by all rights September could take the market to a new low.
If it doesn't, and the pattern holds for an upswing, then October & November should take it to lows. This sets us up for the Santa Claus year end rally.
But with no election where is the impetus for said rally? There would have to be an evacuation of the bond market to allow liquidity for stocks to make a substantial run up.
Worldwide cash inflows to US Treasuries & MBS are at record levels. No one, no where is offering the returns we are. With the current dollar pullback and soaring oil, this makes a hard case to abandon bonds and go with stocks.
If one thinks further debauching of the currency and economic duress is ahead, this spells lower interest rates, which means bonds keep on partying to lock in the current "higher" rates before yields plummet further, right?
We think this is the perfect storm, and the perfect trap. We still maintain, do not go against the dollar and rates will rise. The bond market should be in a pennant flag waving pattern until late October, then a correction occurs through year end.
This could stuff enough fuel in Santa's bag for stocks to make a year end run after making their latest lows. With all that said, we can say this, we think the downtrend will last at least the rest of this month.
Certain indices have recently dropped below key support levels with authority. The NDX, NAS, MID, RUT, SP500 just broke 60 DMA, the DJIA just broke 180DMA.
If the indices should break these levels look out: NDX @ 1500; Nasdaq @ 2050; SOX @ 425; DJIA @ 10250; SP500 @ 1190; MID @ 675; RUT @ 625.
We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong.
Support: DJIA 10250 ; SP500 1200 ; Nasdaq 2050; NDX 1535
European & Asian markets split. Dollar down vs. Yen/Euro , XAU & gold bugs up, gold down, XOI down & oil up, commodities up, bonds up.
Today's Soohey Pig Award goes to me for letting the pig have a quiet day in its poke.
Monday a whipsaw day which ended barely up. Tuesday, a down day with little to cheer about other than utilities getting a bid from divident seekers.
Wend, started down then swung to the upside, when oil hit $67 a barrel all hell broke loose and the market went down big and fast.
Thurs, nothing to write home about as the market closed up slightly but large caps, MID & RUT were weak and hinting of what was to come.
Today, Greenspan called the housing boom an economic "imbalance", driving down the dollar and most asset classes with it.
A consolidation ensued, MID, RUT & SOX were beat like drums, coupled with Wend. performance, adding up to a down week and continuation of the pattern beginning August 2nd.
The markets failure to bounce up and make another run at the top has short positions which we were screaming for 7 days before August 2nd looking real sweet.
Aug 8th we advised on VIX/VXD Futures, those are also looking sweet as volatility has picked up nicely.
An investigation of 1 year indices chart patterns across the board reveals that the current down trend could play out by the end of August rather than September. The end of August needs to watched CLOSELY.
Observing the NDX, starting at the end of April, very clear 1 month wave durations occur.
The pattern calls for one more wave up, lasting one month and taking another swing at the peaks, followed by a short duration correction (much like Dec 04), then its downhill from there.
However, whether this occurs or not, depends on what vacationing traders worldwide decide to do upon their return Sept 1st. September is not traditionally a kind month for the markets.
As sellers take profits, returning traders could interpret the current level as a good consolidation base and "buying opportunity".
Others may just be buying on the "dips" as they see it. This could fuel the market for one more upwave through the end of September.
Looking at it another way, oil prices and bond markets are sucking the market dry. If August is any indication, by all rights September could take the market to a new low.
If it doesn't, and the pattern holds for an upswing, then October & November should take it to lows. This sets us up for the Santa Claus year end rally.
But with no election where is the impetus for said rally? There would have to be an evacuation of the bond market to allow liquidity for stocks to make a substantial run up.
Worldwide cash inflows to US Treasuries & MBS are at record levels. No one, no where is offering the returns we are. With the current dollar pullback and soaring oil, this makes a hard case to abandon bonds and go with stocks.
If one thinks further debauching of the currency and economic duress is ahead, this spells lower interest rates, which means bonds keep on partying to lock in the current "higher" rates before yields plummet further, right?
We think this is the perfect storm, and the perfect trap. We still maintain, do not go against the dollar and rates will rise. The bond market should be in a pennant flag waving pattern until late October, then a correction occurs through year end.
This could stuff enough fuel in Santa's bag for stocks to make a year end run after making their latest lows. With all that said, we can say this, we think the downtrend will last at least the rest of this month.
Certain indices have recently dropped below key support levels with authority. The NDX, NAS, MID, RUT, SP500 just broke 60 DMA, the DJIA just broke 180DMA.
If the indices should break these levels look out: NDX @ 1500; Nasdaq @ 2050; SOX @ 425; DJIA @ 10250; SP500 @ 1190; MID @ 675; RUT @ 625.
We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong.
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