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The 2009 home stretch could be bumpy for stocks

Posted Nov 2nd 2009 10:20AM by Tom Johansmeyer (RSS feed)
Filed under: Earnings reports, Cisco Systems (CSCO), Time Warner (TWX), Starbucks (SBUX), Kraft Foods'A' (KFT)

Equity markets ended the third quarter with their biggest losses in four months, and we're now staring down the closing months of 2009. Half the quarter, of course, is dominated by holiday sales, which ups the stakes at the finish line and sets the tone for the bulk of 2010.

Even though company performances have been fairly strong through this reporting season, it's tough to shake the nerves associated with depressed consumer spending and high unemployment.

Continue reading The 2009 home stretch could be bumpy for stocks

S&P overvalued by 40%, according to economist Smithers

Posted Oct 26th 2009 9:00AM by Tom Johansmeyer (RSS feed)
Filed under: Economic data, Recession, Financial Crisis

Economist and president of a research firm that bears his name, Andrew Smithers (not related to the Smithers of Mr. Burns fame) is saying our on-fire stock market is set to burn itself out. The S&P 500 Index is overvalued by 40%, he believes, and we can expect a plunge thanks to central bankers restraining themselves on the securities purchases that have pushed the markets up so far so fast. Also, banks are going to need to sell more shares to raise capital and pump up their balance sheets.

If the S&P 500 were to take a 40% dive today, it would fall to 647.76 (based on the Friday close), below the low it recorded in March.

Continue reading S&P overvalued by 40%, according to economist Smithers

Today's technical outlook: How far can this rally go?

Posted Mar 13th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

On Thursday, the S&P 500 closed above the 20-day moving average at 745.10 for the first time since Feb. 9. And it closed above the resistance line drawn from the November low at 741.02 for the first time since Feb. 13.

Volume for each of the days of higher prices increased to more than 1.8 billion shares on the NYSE, and that is a higher-than-average volume for any month this year (1.6 billion average). But volume has been picking up since the breakdown on Feb. 27 at S&P 740 when more than 2 billion shares traded.

With a reflex rally now underway, the question is: "How far can it go?"

Continue reading Today's technical outlook: How far can this rally go?

Today's technical outlook: Still looking for a signal

Posted Mar 10th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500

Technicians continue to bemoan that, despite the oversold internal indicators and sentiment numbers that show record levels of fear, the market continues to sell off. Normally at such oversold levels of the key indicators we should expect a rally -- but not lately.

A rally may be overdue but, so far, all we seem to get is one or two days up and then down again. The mood is best described by a Standard & Poor's market strategist who on Friday said, "We think the market is in desperate need of a washout to at least turn the tide for awhile back to the upside. We have been looking for a counter-trend rally, but all we are seeing are one-day wonders."

So where is the bottom -- or bottoms?

Continue reading Today's technical outlook: Still looking for a signal

Today's technical outlook: Are rallies doomed to fail?

Posted Mar 9th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA, NASDAQ

Late Friday, it looked like the market would suffer another loss until buyers (or traders who were covering shorts) salvaged the day with a 25-minute rally. But despite Friday's small gain, the week was the worst in memory for the Dow, as it fell 6.2%. The S&P 500 was off 7% and the Nasdaq dropped 6.1% for the week.

Despite the extremely oversold internal indicators, the stock market shows no indication of having made a bottom.

Continue reading Today's technical outlook: Are rallies doomed to fail?

Today's technical outlook: Markets desperately seeking support

Posted Mar 6th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

The S&P 500 double-bottom finally collapsed Feb. 27, after holding firm for more than four months. But the strong 800 to 820 support zone gave way several weeks before, led by the Dow Industrials, which cracked its support at 7,940 even before that.

The breakdown hit a plateau at the Dow 7,390 area, which also marked the market's low on Nov. 21. After several days of indecision, sellers drove stocks to new lows and the Dow headed for lower ground. So where do we go from here?

Continue reading Today's technical outlook: Markets desperately seeking support

Today's technical outlook: No bottom in sight

Posted Mar 5th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

With the market breaking to new lows last week, the market ended the worst six months of trading since 1932. But even with the Dow and the broader-based indices down more than 50%, there appears to be no bottom yet in sight for the major indices.

Some technicians are calling for at least a modest reflex rally, and that certainly is overdue. Perhaps we even saw the beginning of it yesterday.

But don't count on making money on reflex rallies unless you're almost perfect at picking tops and bottoms -- and I know of few traders who can consistently perform that bit of magic.

Continue reading Today's technical outlook: No bottom in sight

Today's technical outlook: No certainties for market's next move

Posted Mar 4th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

After five days down, many are saying that the market is bound to get a rally since it is so "oversold."

But the current break is much like the October drop that took the Dow from just above 10,500 to 7,774 in seven-straight sessions, ending with the selling climax of Oct. 10. And that last day of selling ended the decline when a key reversal finally marked the bottom of a trading range that would last for more than four months.

The point is that the market doesn't "have to do" anything. The current sell-off could end today or extend for any length of time, but it will likely end on a climax similar to the one on Oct. 10.

Continue reading Today's technical outlook: No certainties for market's next move

Today's technical outlook: Beware the falling knife

Posted Mar 3rd 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

The Dow Industrials broke down as long ago as Feb. 20, and it looked like any breakdowns might be confined to just those few stocks. But with Friday's new closing low on the S&P 500 and yesterday's massive sell-off with very wide breadth, it is clear that the near-term trend clearly supports lower prices.

But how low?

Support zones just don't give a clear answer to that, since we must go back to 1996 before any support shows. Mid-year to mid-fall 1996 show a support zone for the Dow Industrials at 5,300 to 5,800 and the S&P 500 at 625 to 680. That is more than 12 years back and, since time takes away from accuracy, we will go to another source for our "guesstimate."

Continue reading Today's technical outlook: Beware the falling knife

As Dow falls below 7,000, S&P flirts with 700, Nasdaq still above November lows

Posted Mar 2nd 2009 3:15PM by Melly Alazraki (RSS feed)
Filed under: Major movement, Indices, S and P 500, DJIA, NASDAQ

From the get go this morning we knew the Dow Jones Industrial Average was going to open below 7,000, and the way things are going now, it looks like it will close below (far below) 7,000 as well. These levels were last seen over 11 years ago, in 1997.

As the trading progressed, we also saw the S&P 500 blow through its November lows and starts flirting, to the horror of many, with the 700 level -- 704.27 was its low so far today.

And still, the Nasdaq remains above its November 2008 lows. How come, and will it last?

Continue reading As Dow falls below 7,000, S&P flirts with 700, Nasdaq still above November lows

Today's technical outlook: Obama's bad timing

Posted Feb 26th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA, NASDAQ

Since Obama's inauguration, the market seems to have responded negatively to the president's rhetoric, and yesterday was no exception. Within seconds of a White House alert that the president and his chief economic advisers would make an important announcement, stocks headed south.

And by the time that President Obama -- flanked by his team -- began the address at 3:50 p.m. Eastern, the Dow had given up more than 100 points, with investors fearful that the team had decided on a major policy shift.

Despite the poor timing of the White House's news conference, which contained little new information and spooked traders into a flurry of profit-taking, Wednesday's small correction did little to change Tuesday's upside reversal and the probability of further buying.

Continue reading Today's technical outlook: Obama's bad timing

Today's technical outlook: Support levels under attack

Posted Feb 24th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

Despite oversold internal indicators and almost record bearish sentiment numbers, the three major indices fell again yesterday, with the Dow and the S&P 500 recording new lows. It appears that the major indices are falling one by one, with the Dow leading the way down.

The most important event Monday was the S&P 500 setting a new closing low while just above a point from the intraday low of Nov. 21 at 741.02. The other important broader-based index, the NYSE Composite, is also just a fraction of a point from a new closing and intraday low. Only the Nasdaq is holding, but even it is approaching a major support line at 1,385, and if that gives way, an attack on its November low seems inevitable.

Continue reading Today's technical outlook: Support levels under attack

Today's technical outlook: Is a bear-market rally in the cards?

Posted Feb 23rd 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

Despite the Dow breaking to new lows, there were a number of positive signs on Friday that could indicate that a bear market rally is just about to get underway.

As pointed out by our friends at Dorsey Wright, the Nasdaq has remained above its November low of 1,295, and the S&P 500 is also just above its November low of 741. And Dorsey said its NYSE Bullish Percent took a big hit on Friday, falling 5.6% to 26.4%. But this is well above the November lows of 8% and they said it is "exactly what we want to see in a re-test with individual stocks holding up better than the indices."

Continue reading Today's technical outlook: Is a bear-market rally in the cards?

Today's technical outlook: Day of decision after support lines broken

Posted Feb 20th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

One by one, the key indices appear to be breaking their support lines.

The Dow Industrials were the first to break earlier this week and yesterday set a new bear market closing low. Now the S&P 500 has fallen through its support zone at 800-820 and so has the NYSE Composite. Only the Nasdaq is holding above its January low, while the others are in a full test of the November bear market bottoms.

For several days, I've been comparing this week's market action with the week of Nov. 17, when the market broke to new lows and then reversed. We've discussed the closing low of Nov. 20 and the subsequent reversal on Nov. 21, with its new intraday low, the similarity in the volume, the similar stochastic readings and so on.

Continue reading Today's technical outlook: Day of decision after support lines broken

Today's technical outlook: Shorts may feel the squeeze soon

Posted Feb 19th 2009 9:30AM by Sam Collins (RSS feed)
Filed under: Technical Analysis, S and P 500, DJIA

One by one, the key indices appear to be breaking their support lines.

The Dow Industrials were the first to break, but the S&P 500 has also fallen through its support zone at 800 to 820, and so has the NYSE Composite. Only the Nasdaq is holding above its January low while the others are in a full test of their November bear market bottoms.

But despite the full attack on the bear market low, it would be dangerous to assume that a market sell-off is inevitable.

Continue reading Today's technical outlook: Shorts may feel the squeeze soon

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