The market closed higher for the week and on Thursday’s shortened pre-holiday session. Volume, an important indicator of institutional sponsorship, was lighter than Wednesday’s levels, again revealing the lack of appetite for accumulating shares from very large and influential institutional investors. Advancers led decliners by nearly a X-to-X ratio on the NYSE and by over…
Looking at the market, the Dow Jones Industrial Average and benchmark S&P 500 index both closed near their respective resistance levels as they quietly consolidate their recent gains in lighter pre-holiday volume. Meanwhile, the tech-heavy Nasdaq composite continues to lead its peers as it managed to hit another 2009 high on Wednesday.
Remember that the S&P 500 plunged -58% from its all time high in October 2007 of 1,576 to its March 2009 low of 666. Since then, the market has rebounded over +65% but still remains -29% below its all-time high of 1,576. In addition, the index has retraced nearly -50% (455 points) of its decline (910 points) which is a popular Fibonacci level used by many technical analysts. Normally, markets rebound approximately 50% before resuming their prior trend (which would be down in this case). Longstanding readers of this column know that we do not predict the future. Instead, we remain open to any possible scenario that may unfold and interpret what we see happening by remaining objective and carefully analyzing the tape (price and volume) each day.
Tuesday, December 22, 2009 Market Commentary: Stocks in the US closed higher after the latest round of economic data was released. Volume, an important indicator of institutional sponsorship, was lower than Monday’s levels. Advancers led decliners by nearly a 2-to-1 ratio on the NYSE and by a 16-to-11 ratio on the Nasdaq exchange. There were…
It was very encouraging to see the Nasdaq breakout of its current trading range and hit a new 2009 high on Monday! It is also very encouraging to see the Philly Semiconductor Index (SOX) gap higher and hit a fresh 2009 high as well. Meanwhile,the Dow Jones Industrial Average and S&P 500 closed just below 10,500 and 1,120, their respective resistance levels. Apple Inc. (AAPL) closed above its 6-week downward trendline and above its 50 day moving average line which is a healthy sign and bodes well for this 42-week rally.
Friday, December 18, 2009 Market Commentary: The major averages ended the week mixed as the US dollar continued to rally and investors digested a slew of economic data. Stocks closed higher on Friday as volume, an important indicator of institutional sponsorship, jumped above Thursday’s levels due to quadruple witching. Advancers led decliners by an 11-to-8…
Th Inverse Correlation Explained:
In the recent past, there has been an inverse correlation between the U.S. dollar and dollar denominated assets (mainly stocks and commodities). By definition, the inverse correlation states that stocks and commodities (which are priced in dollars) will fall when the dollar rallies. Since early December, the greenback has steadily rallied which has put pressure on several capital markets. As the following few charts show, on a relative basis, crude oil is the hardest hit, followed by gold, then U.S. equities. What does this mean? We’ll let you draw your own conclusions by commenting below.
The US dollar dominated the headlines on Thursday, and sent a slew of dollar denominated assets lower (mainly stocks and commodities). The major averages continued pulling back from important resistance levels and appear to be headed for support (just above their respective 50 day moving average lines). Until either support or resistance is breached, expect this bracketed (sideways) action to continue.
On Wednesday, the major averages closed near important resistance levels as leading stocks were mixed. The Dow Jones Industrial Average and benchmark S&P 500 index closed below 10,500 and 1,115, their respective resistance levels. The Nasdaq composite closed just above 2200 which has served as an important level of resistance for the tech heavy index in recent months.
At this point, the action remains healthy as long as the major averages remain above their respective 50-day moving average lines. So far the market has held up rather nicely to the slew of economic data that was released this week. As long as this action continues, the major averages deserve the bullish benefit of the doubt.
On Tuesday, each of the major averages pulled back from logical resistance levels as leading stocks were mixed. The Dow Jones Industrial Average and benchmark S&P 500 index closed just below 10,500 and 1,115, their respective resistance levels. The Nasdaq composite closed just above 2200 which has served as an important level of resistance for the tech heavy index in recent months.
The S&P 500 and Dow Jones Industrial Average closed at fresh 2009 highs on Monday. At this point, the major averages are just below important resistance levels for the year (Full commentary here) and appear poised to move higher. If they manage to close above their respective resistance levels on heavy volume then odds will favor a new leg higher will commence. That said, here is a list of 30 stocks that sport strong technical chart patterns: