Today, Treasury Secretary Geithner made the rounds on the Sunday talk shows, and indicated that some banks still need substantial aid. It was also announced that the Obama administration has asked GM CEO Rick Wagoner to step down. So now we have the government running banks, insurance companies (AIG) and auto manufacturers. Soon, if Obama has his way, the government will have a much more significant presence in the health care industry and energy industries.
At the end of this past week, I visited with the property owner of an 8 unit apartment property I am appraising. The property is owned by a couple of reasonably successful realtors, has a very good location and a strong operating history. They are re-financing a loan since the original 5 year fixed term is expiring. They are getting their financing from a credit union at a rate of about 6.25% fixed for 5 or 7 years (he wasn't sure at the time). The small bank that holds the original mortgage was offering a rate of 7%. That is more than double the Prime Rate of 3.25% and over 200 basis points higher than the average rate for 30 year residential mortgages. And yet, even in the current economic environment, this property is probably as low of a risk as an investor can find besides a land lease to McDonald's!
Needless to say, I don't see much improvement in the credit markets when it comes to commercial lending. I've just received my copy of the Korpacz Real Estate Investment Survey, which is published quarterly. It indicates that overall capitalization rates for commercial and industrial real estate, a guage of expected returns, have risen by nearly 50 basis points in just the last quarter. This indicates the substantial tightening in the credit markets since last Fall.
With that in mind, it is clear that commercial real estate may be the next shoe to drop. I have heard this from top investors over the last few months, but the evidence is becoming more clear. If we have a similar problem to what we had twenty years ago during the Savings and Loan crisis, then I do not see how this economy will be able to recover by the end of this year.
Just some food for thought. Forecasting the economy is never an easy undertaking. Pay close attention to the action of the market. That is the best forecasting tool we have.
Scott Cole
www.theultimatestocktradingsystem.com
Sunday, March 29, 2009
Saturday, March 28, 2009
Identifying the Next Stock Market Winners
Since the U.S. stock market hit its closing low on March 9th, it has rallied over 20%. Even prior to the Dow Jones Industrial Average’s 497 point advance on March 23rd, the market had shown significant signs that a nice rally was in force. Smart investors, who’ve been waiting for a decent opportunity to put some capital to work, have set their sights on the stocks that are showing significant strength compared to the rest of the market.
Picking the next big movers in the stock market can be a daunting task. But, many of today’s analytical programs make this task a little bit easier. I use a program called Telechart by Worden Brothers, and have been using this program for about ten years. However, many of the online brokerages offer good capabilities as well.
Here are a few tips to finding stocks that are ready to make nice moves over a couple month period:
1. Look for the stocks that are trading at or near new 52 week highs
2. Look for stocks that are trading further above their 52 week lows than other stocks
3. Look for stocks that have shown significant increases in volume over the last six months
Once you have identified a number of stocks that show these characteristics, look for stocks that have been consolidating for a couple weeks, and up to four or five weeks. We don’t want to enter a new position when a stock has been up 10 days in a row, so we look for those that have traded sideways for a bit within a nice uptrend. We then look to enter a trade when the stock breaks out above its recent consolidation pattern.
These are your high momentum stocks that, when market conditions are good, can give you a pop of 50% to over 100% in just a couple months. However, in the current market environment, it is a good idea to scale back expectations, and not to use any leverage. However, these stocks can provide you with decent short term returns. If it becomes clear that economic conditions are improving significantly, you can then be more aggressive.
Remember, there is no full proof trading strategy. This type of strategy will generally result in more losing trades than winning trades. However, if you use some common sense and manage your risk, you can enjoy decent returns, as a few good trades will more than make up for the small losing trades.
Scott Cole
www.theultimatestocktradingsystem.com
Picking the next big movers in the stock market can be a daunting task. But, many of today’s analytical programs make this task a little bit easier. I use a program called Telechart by Worden Brothers, and have been using this program for about ten years. However, many of the online brokerages offer good capabilities as well.
Here are a few tips to finding stocks that are ready to make nice moves over a couple month period:
1. Look for the stocks that are trading at or near new 52 week highs
2. Look for stocks that are trading further above their 52 week lows than other stocks
3. Look for stocks that have shown significant increases in volume over the last six months
Once you have identified a number of stocks that show these characteristics, look for stocks that have been consolidating for a couple weeks, and up to four or five weeks. We don’t want to enter a new position when a stock has been up 10 days in a row, so we look for those that have traded sideways for a bit within a nice uptrend. We then look to enter a trade when the stock breaks out above its recent consolidation pattern.
These are your high momentum stocks that, when market conditions are good, can give you a pop of 50% to over 100% in just a couple months. However, in the current market environment, it is a good idea to scale back expectations, and not to use any leverage. However, these stocks can provide you with decent short term returns. If it becomes clear that economic conditions are improving significantly, you can then be more aggressive.
Remember, there is no full proof trading strategy. This type of strategy will generally result in more losing trades than winning trades. However, if you use some common sense and manage your risk, you can enjoy decent returns, as a few good trades will more than make up for the small losing trades.
Scott Cole
www.theultimatestocktradingsystem.com
Friday, March 27, 2009
Stocks end week on down note
U.S. Stocks opened lower and never recovered, but traded in a narrow range today. This was a classic case of profit taking after a big up week for the major averages. Volume was very light today, and the averages generally closed near Thursday's lows.
With all this in mind, I suspect we will see some more selling next week. We will be getting another look at the jobs market next week, which will likely have a significant impact. Any sign of improvement could help the market rally. It is all about perception, however, so pay attention to Wall Street estimates to get a feel for what direction the market will head, based upon the number reported.
More to come over the weekend.
Scott Cole
www.theultimatestocktradingsystem.com
With all this in mind, I suspect we will see some more selling next week. We will be getting another look at the jobs market next week, which will likely have a significant impact. Any sign of improvement could help the market rally. It is all about perception, however, so pay attention to Wall Street estimates to get a feel for what direction the market will head, based upon the number reported.
More to come over the weekend.
Scott Cole
www.theultimatestocktradingsystem.com
Wednesday, March 25, 2009
Stocks rise after whipsawing day
U.S. stocks closed higher after a late day rally concluded a whipsawing day. The market traded higher early in the morning on the heels of President Obama's prime time news conference last night. Later, on remarks regarding the status of the Dollar's role as the world's leading currency helped drive the market lower. However, late in the day, when Treasury Secretary Geithner indicated that a strong Dollar is the policy of the government, the market reacted positively and rallied.
What this all means is that the market is a bit confused at the moment. There was actually some positive news out this morning regarding the housing market and durable goods orders. I also had the chance to meet with a realtor this morning at a property I am appraising, and he indicated that the low mortgage rates along with the $8,000 tax credit for first time buyers is definitely providing a lift to the residential real estate market. However, the above $300,000 price range is still suffering from slow sales, as that was the sector that saw the most over building in our area.
In other markets, 10 Year Treasury Note yields rose for the 3rd day in a row, and 4 out of the last 5 days since the Fed's announcement that it will be buying up to $300 billion worth of Treasuries to keep yields low. In the UK, there was a very poor auction of securities in that country, as investors no longer seem to have the appetite for government debt in countries where spending is getting out of control.
At the end of the day, the Dollar Index was generally flat, but the price pattern on the daily chart seems to be pointing toward lower prices. Commodity prices were generally lower.
Scott Cole
www.theultimatestocktradingsystem.com
What this all means is that the market is a bit confused at the moment. There was actually some positive news out this morning regarding the housing market and durable goods orders. I also had the chance to meet with a realtor this morning at a property I am appraising, and he indicated that the low mortgage rates along with the $8,000 tax credit for first time buyers is definitely providing a lift to the residential real estate market. However, the above $300,000 price range is still suffering from slow sales, as that was the sector that saw the most over building in our area.
In other markets, 10 Year Treasury Note yields rose for the 3rd day in a row, and 4 out of the last 5 days since the Fed's announcement that it will be buying up to $300 billion worth of Treasuries to keep yields low. In the UK, there was a very poor auction of securities in that country, as investors no longer seem to have the appetite for government debt in countries where spending is getting out of control.
At the end of the day, the Dollar Index was generally flat, but the price pattern on the daily chart seems to be pointing toward lower prices. Commodity prices were generally lower.
Scott Cole
www.theultimatestocktradingsystem.com
Tuesday, March 24, 2009
Stocks give back some of Monday's Gains
Well, considering that I was traveling both last Tuesday and yesterday while the market was making big gains, many people might wish that I had stayed on a plane today! After yesterday's nearly 500 point advance in the Dow, it gave back over 100 points today, and the other major averages were distinctly weaker. As Don Worden mentions in his TC2000 notes yesterday, the market rise actually occurred on volume that was lighter than last Friday. That is an indication that there was no major accumulation in yesterday's big rise.
Another ominous sign today was that the market sold off in the last hour. After opening lower, and staying down for the first half of the day, the Dow clawed its way back into positive territory. At about 3 pm, it was down only marginally, and Maria Bartiromo arrived with her pom poms on CNBC, ecstatic about the positive vibes on the floor at the NYSE.
I had no doubt a couple weeks ago that we were due for a nice rally, and we have already gotten it. Unfortunately, these are pretty common within Bear Markets. The 2000-2003 market shows many of these rallies, more so than the current Bear. But, there are far too many analysts willing to call this month's bottom THE BOTTOM, which suggests to me we may still have some pain to deal with. We may not make a new low, but we certainly will not be surpassing the 2007 highs any time soon.
Let's look at some long range issues. Our interest rates are being MANIPULATED by the Federal Reserve now at artificially low levels, while our government adds to our national debt at an alarming rate. Ultimately, this WILL result in significant inflationary problems as the Dollar will get pounded, and we will no doubt see higher personal and corporate taxes to pay for all this largesse.
Generally speaking, the current time period is more similar to the 1966-1982 period that involved an unpopular war, energy troubles, and rising debt. Until the Dow broke out above 1000 for good in 1982, it traded in a sideways pattern with several Bear markets in between. Unfortunately, our issues now seem to be worse.
Yes, we will likely see some recovery down the road, maybe even later this year. But, don't expect a raging bull market to be the result. What is going on in Washington right now will hamstring American business and the economy for years to come.
With all this in mind, stay nimble. There will be stocks that are capable of making nice moves in this environment, and we will keep you posted about those opportunities!
Scott Cole
www.theultimatestocktradingsystem.com
Another ominous sign today was that the market sold off in the last hour. After opening lower, and staying down for the first half of the day, the Dow clawed its way back into positive territory. At about 3 pm, it was down only marginally, and Maria Bartiromo arrived with her pom poms on CNBC, ecstatic about the positive vibes on the floor at the NYSE.
I had no doubt a couple weeks ago that we were due for a nice rally, and we have already gotten it. Unfortunately, these are pretty common within Bear Markets. The 2000-2003 market shows many of these rallies, more so than the current Bear. But, there are far too many analysts willing to call this month's bottom THE BOTTOM, which suggests to me we may still have some pain to deal with. We may not make a new low, but we certainly will not be surpassing the 2007 highs any time soon.
Let's look at some long range issues. Our interest rates are being MANIPULATED by the Federal Reserve now at artificially low levels, while our government adds to our national debt at an alarming rate. Ultimately, this WILL result in significant inflationary problems as the Dollar will get pounded, and we will no doubt see higher personal and corporate taxes to pay for all this largesse.
Generally speaking, the current time period is more similar to the 1966-1982 period that involved an unpopular war, energy troubles, and rising debt. Until the Dow broke out above 1000 for good in 1982, it traded in a sideways pattern with several Bear markets in between. Unfortunately, our issues now seem to be worse.
Yes, we will likely see some recovery down the road, maybe even later this year. But, don't expect a raging bull market to be the result. What is going on in Washington right now will hamstring American business and the economy for years to come.
With all this in mind, stay nimble. There will be stocks that are capable of making nice moves in this environment, and we will keep you posted about those opportunities!
Scott Cole
www.theultimatestocktradingsystem.com
Monday, March 23, 2009
Stocks set for Sharp Rally at Open
U.S. stocks are set to rally sharply this morning after Treasury Secretary Geithner released more details regarding his plan to deal with the toxic asset issue. As I write this early Monday morning, S&P futures are up 20 points, or well over 2%.
Stay tuned!
Scott Cole
www.theultimatestocktradingsystem.com
Stay tuned!
Scott Cole
www.theultimatestocktradingsystem.com
Sunday, March 22, 2009
The Week Ahead in Stocks
At the end of last week we had a modest pullback in the U.S. stock market after a couple weeks worth of big gains that saw the major averages rise over 15% from their recent lows. We saw the big follow through day we wanted to see that confirmed the recent rally may have some legs. This is no guarantee that the rally is sustainable, but major rallies do not start without that follow through day.
Now, we will see if the rally can hold. I suspect we will have a bit more pullback early this week, and then we'll if the market can break through last week's highs. A lot depends upon what comes out of Washington, as Congress begins debate on the Obama budget. Friday's release of the Congressional Budget Office's forecast of economic growth and budget deficits suggests that Obama's grand plans may need to be scaled back quite a bit, as moderate Democrats, particularly those elected in more conservative districts, worry about their re-election prospects in 2010. With that in mind, keep an eye on the rhetoric out of Washington, as it may have an impact on the markets.
The bottom line is that the markets were deeply oversold, and the market was way overdue for some kind of a rally. Short covering was clearly the primary driver in the market's rally over the last couple weeks, as there really has not been any very positive economic news. However, I think it is interesting that, since the Fed announced its plan to start buying hundreds of billions of dollars worth of Treasury securities in an effort to but a ceiling on interest rates, the market has traded lower. In my view, this is an artificial propping up of the Treasury markets, that, when combined with the incredible amount of fiscal spending and other Treasury spending in the last six months, can only lead to inflation down the road. Well, that is how the Dollar reacted anyway!
The Dollar Index crashed to two month lows before rallying modestly on Friday. It was pointed out by an analyst on Bloomberg that the currencies in countries where quantitative easing has been utilized to help stimulate economic recovery have been the currencies being sold. This includes the Dollar, Swiss Franc and British Pound. Currencies such as the Euro and Australian Dollar have benefited as a result. As a result, both of those currencies made solid breakouts in the last few days. However, overall, I am not yet convinced these currencies have much greater upside potential in the near term. They likely need to consolidate a bit at these current levels.
We also noted a rise in commodity prices this week, as traders are betting on a combination of economic recovery, inflationary risks, and adjustments in the supply of these commodities to match up with current demand. Commodity prices were another bubble that burst last year, and their declines have in many cases been steeper than the stock market declines. Now, however, we have seen some of these commodities form a nice base and begin to rally. Crude Oil and Copper come to mind. Some agricultural markets, such as Corn and Soybeans, have also staged nice rallies in the last couple weeks. These markets will not shoot straight up like they have in recent years, but could provide nice, tradable rallies in the coming months.
Scott Cole
www.theultimatestocktradingsystem.com
Now, we will see if the rally can hold. I suspect we will have a bit more pullback early this week, and then we'll if the market can break through last week's highs. A lot depends upon what comes out of Washington, as Congress begins debate on the Obama budget. Friday's release of the Congressional Budget Office's forecast of economic growth and budget deficits suggests that Obama's grand plans may need to be scaled back quite a bit, as moderate Democrats, particularly those elected in more conservative districts, worry about their re-election prospects in 2010. With that in mind, keep an eye on the rhetoric out of Washington, as it may have an impact on the markets.
The bottom line is that the markets were deeply oversold, and the market was way overdue for some kind of a rally. Short covering was clearly the primary driver in the market's rally over the last couple weeks, as there really has not been any very positive economic news. However, I think it is interesting that, since the Fed announced its plan to start buying hundreds of billions of dollars worth of Treasury securities in an effort to but a ceiling on interest rates, the market has traded lower. In my view, this is an artificial propping up of the Treasury markets, that, when combined with the incredible amount of fiscal spending and other Treasury spending in the last six months, can only lead to inflation down the road. Well, that is how the Dollar reacted anyway!
The Dollar Index crashed to two month lows before rallying modestly on Friday. It was pointed out by an analyst on Bloomberg that the currencies in countries where quantitative easing has been utilized to help stimulate economic recovery have been the currencies being sold. This includes the Dollar, Swiss Franc and British Pound. Currencies such as the Euro and Australian Dollar have benefited as a result. As a result, both of those currencies made solid breakouts in the last few days. However, overall, I am not yet convinced these currencies have much greater upside potential in the near term. They likely need to consolidate a bit at these current levels.
We also noted a rise in commodity prices this week, as traders are betting on a combination of economic recovery, inflationary risks, and adjustments in the supply of these commodities to match up with current demand. Commodity prices were another bubble that burst last year, and their declines have in many cases been steeper than the stock market declines. Now, however, we have seen some of these commodities form a nice base and begin to rally. Crude Oil and Copper come to mind. Some agricultural markets, such as Corn and Soybeans, have also staged nice rallies in the last couple weeks. These markets will not shoot straight up like they have in recent years, but could provide nice, tradable rallies in the coming months.
Scott Cole
www.theultimatestocktradingsystem.com
Thursday, March 19, 2009
Stocks decline after big 2 day rally
U.S. stocks pulled back after two days of big gains, as traders booked some profits in a market that had risen 17% in just a couple of weeks. Although there may have been some skepticism today regarding the Fed's plan to buy Treasuries, the bottom line is that the market is due for a break and there is a good bit of overhead resistance above 800 on the S&P 500.
In my view, the plan may help with some of the liquidity issues in the credit markets, but with a weak jobs market, I don't expect a big rally in the housing market any time soon. This mess will take time to solve, and Washington seems reluctant to do anything but throw money at lousy bank, insurance and auto businesses. Dealing with the bad mortgage securities will also help allow the banks to lend money again, which could help small businesses. Still, with such huge job losses in the last year, and more likely to come, this economy will not be turning quickly.
Yesterday, I commented on how Gold had closed below $900...however in the electronic session shortly after the Fed announcement, Gold surged, and today closed up over $950. This was clearly in response to the announcement and the perception that it has inflationary repercussions down the road. The Dollar response was a further sharp sell off today, while Treasuries held relatively steady.
Scott Cole
www.theultimatestocktradingsystem.com
In my view, the plan may help with some of the liquidity issues in the credit markets, but with a weak jobs market, I don't expect a big rally in the housing market any time soon. This mess will take time to solve, and Washington seems reluctant to do anything but throw money at lousy bank, insurance and auto businesses. Dealing with the bad mortgage securities will also help allow the banks to lend money again, which could help small businesses. Still, with such huge job losses in the last year, and more likely to come, this economy will not be turning quickly.
Yesterday, I commented on how Gold had closed below $900...however in the electronic session shortly after the Fed announcement, Gold surged, and today closed up over $950. This was clearly in response to the announcement and the perception that it has inflationary repercussions down the road. The Dollar response was a further sharp sell off today, while Treasuries held relatively steady.
Scott Cole
www.theultimatestocktradingsystem.com
Fed Plan Boosts Stocks
Ben Bernanke and the Federal Reserve announced a more aggressive plan to buy Treasury securities and mortgages, sending stock prices up yesterday afternoon, and putting a short-term top in interest rates. This announcement came after a solid up day in stocks the day before, which was the follow through day we had been looking for, signifying this could be a sizable Bear Market rally at the least.
While stocks and Treasuries rallied on the news, the U.S. Dollar plunged, as it is clear the Fed will be running the printing presses at high capacity to pay for its Treasury purchases. Combined with the Obama administrations aggressive budget plans, the long term outlook for U.S. assets may be shaky. For now however, the direction in stocks appears to be to the upside. With that in mind, we will begin to focus attention on the stock market leaders for potential momentum trades. Our Ultimate Stock Trading System has been 100% in cash since October.
In other markets, commodity prices were mixed on the session. It was notable that Gold prices dropped substantially yesterday after the Fed announcement. Gold closed at its lowest price since late January. A head and shoulders top pattern was broken to the downside, and targets a price of under $800 for the precious metal in the next few weeks.
Scott Cole
www.theultimatestocktradingsystem.com
While stocks and Treasuries rallied on the news, the U.S. Dollar plunged, as it is clear the Fed will be running the printing presses at high capacity to pay for its Treasury purchases. Combined with the Obama administrations aggressive budget plans, the long term outlook for U.S. assets may be shaky. For now however, the direction in stocks appears to be to the upside. With that in mind, we will begin to focus attention on the stock market leaders for potential momentum trades. Our Ultimate Stock Trading System has been 100% in cash since October.
In other markets, commodity prices were mixed on the session. It was notable that Gold prices dropped substantially yesterday after the Fed announcement. Gold closed at its lowest price since late January. A head and shoulders top pattern was broken to the downside, and targets a price of under $800 for the precious metal in the next few weeks.
Scott Cole
www.theultimatestocktradingsystem.com
Friday, March 13, 2009
Stocks end week on positive note
U.S. stocks closed modestly higher on Friday, ending with weekly gains not seen since last November. In all of the major averages, we managed to close above last week's high as well, a very positive sign. Another very positive sign is the formation I see on the weekly charts of the Nasdaq and Nasdaq 100 indexes, which suggest a successful test of the November lows may have occurred. We won't know if that is the case until the January highs are taken out, but the price pattern is very attractive. The only problem I see is that volume tailed off this week compared to last week. Therefore, if prices are to go higher, we need to see more volume.
More to come!
Scott Cole
www.theultimatestocktradingsystem.com
More to come!
Scott Cole
www.theultimatestocktradingsystem.com
Thursday, March 12, 2009
Positive Economic and Market Data Boosts Stocks
U.S. stocks rallied nicely today on the back of retail sales data for February was not as bad as expected; GE's credit rating was cut less than expected; Bank of America indicates it has been profitable so far this year; and GM said it does not need an extra $2 billion loan it thought it may need in March. The result was a big rally on volume that was greater than Wednesday's but less than Tuesday's.
We are now sitting right at some resistance levels in the S&P 500, and it will not surprise me to see the market trade lower on Friday ahead of the weekend, as traders look to book some nice profits for the week. However, it is nice to see some follow through, which suggests this rally has at least some short-term legs. To convince me that this will be a stronger Bear Market rally, we'll need to see another big up day next week.
Scott Cole
www.theultimatestocktradingsystem.com
We are now sitting right at some resistance levels in the S&P 500, and it will not surprise me to see the market trade lower on Friday ahead of the weekend, as traders look to book some nice profits for the week. However, it is nice to see some follow through, which suggests this rally has at least some short-term legs. To convince me that this will be a stronger Bear Market rally, we'll need to see another big up day next week.
Scott Cole
www.theultimatestocktradingsystem.com
Tuesday, March 10, 2009
We Were Due!
We finally got that overdue stock rally we've been looking for! The question now is, will it last? I can tell you with some confidence that Friday's low will hold for a while. Whether this turns out to be just a Bear Market rally, or the beginning of a new Bull Market, only time will tell. In either case, for a significant rally to occur from here, we need to see a nice follow through day in the next week or so. And, we certainly do not want to see a 100+ point down day tomorrow.
Today's rally was sparked by a memo sent out to Citigroup employees that indicated the bank is on pace to make a profit in the current quarter, for the first time since 2007. The market viewed that very positively, as the financials opened strongly to the upside. Later in the day Barney Frank suggested that the uptick rule may be back in place in the near future. I really don't know if that will have much impact or not, but the market seemed to take it as an extra positive.
In any event, the S&P 500 closed up well over 700 today, which was a supposed magic number on the downside. The first area of resistance is in the 740-745 range, which marks the November low. Beyond that, 775-800 will provide significant resistance.
Today's rally in stocks essentially marked the end of the recent uptrend in Gold and Silver, and I am not sure these markets will test their February highs any time soon. Elsewhere, commodities were mixed, with some in agriculture and copper, but crude oil was lower, which was a bit surprising. The Dollar was flat, while Treasuries were a little lower.
Scott Cole
www.theultimatestocktradingsystem.com
Today's rally was sparked by a memo sent out to Citigroup employees that indicated the bank is on pace to make a profit in the current quarter, for the first time since 2007. The market viewed that very positively, as the financials opened strongly to the upside. Later in the day Barney Frank suggested that the uptick rule may be back in place in the near future. I really don't know if that will have much impact or not, but the market seemed to take it as an extra positive.
In any event, the S&P 500 closed up well over 700 today, which was a supposed magic number on the downside. The first area of resistance is in the 740-745 range, which marks the November low. Beyond that, 775-800 will provide significant resistance.
Today's rally in stocks essentially marked the end of the recent uptrend in Gold and Silver, and I am not sure these markets will test their February highs any time soon. Elsewhere, commodities were mixed, with some in agriculture and copper, but crude oil was lower, which was a bit surprising. The Dollar was flat, while Treasuries were a little lower.
Scott Cole
www.theultimatestocktradingsystem.com
Monday, March 9, 2009
Stocks Continue Swoon
U.S. Stocks chopped around for most of the session, before late in the day they once again decided that the path of least resistance was to the downside. Except for the $41 billion merger between Merck and Schering Plough, there was no other news able to support the market.
One disturbing trend I have noticed in recent trading sessions is that the Nasdaq stocks are selling off harder than the Dow and S&P 500. I guess this just could be due to the fact that the financials have gone about as low as they can go. The big bellweather tech stocks, ie, GOOG, AAPL and RIMM are leading the way down, especially Google.
As I mentioned yesterday, I think we are due for a solid bounce, or at least a couple months where the averages trend sideways. With today's down market, the readings on the ADX climbed again, and it will continue to do so, even if the market heads a little higher from here over the next few days. Furthermore, the sentiment is overwhelmingly negative, as another pundit suggested that 600 is the next target level for the S&P 500 and beyond that, 500. 500? Wow, I can remember the first time it broke above that level in 1995! Well, we have quite a ways to go to get down there, although at the rate we are going, and with the continued blundering in Washington, maybe it won't be long until we get down there.
Still, even though we are over due for a bounce, don't run out and buy any stocks yet! You don't have to pick tops and bottoms to make good money. It is the meat in the middle of a trend that will line your pockets, and the trend remains down until further notice.
Elsewhere today, the Dollar made strong gains again, mainly against the British Pound, but all of the major currencies were lower against the Dollar today. Commodities were generally lower today, lead down by Gold, as traders took the opportunity to book some profits after the bounce in the metal at the end of last week. Treasuries were modestly weaker on the session.
Scott Cole
www.theultimatestocktradingsystem.com
One disturbing trend I have noticed in recent trading sessions is that the Nasdaq stocks are selling off harder than the Dow and S&P 500. I guess this just could be due to the fact that the financials have gone about as low as they can go. The big bellweather tech stocks, ie, GOOG, AAPL and RIMM are leading the way down, especially Google.
As I mentioned yesterday, I think we are due for a solid bounce, or at least a couple months where the averages trend sideways. With today's down market, the readings on the ADX climbed again, and it will continue to do so, even if the market heads a little higher from here over the next few days. Furthermore, the sentiment is overwhelmingly negative, as another pundit suggested that 600 is the next target level for the S&P 500 and beyond that, 500. 500? Wow, I can remember the first time it broke above that level in 1995! Well, we have quite a ways to go to get down there, although at the rate we are going, and with the continued blundering in Washington, maybe it won't be long until we get down there.
Still, even though we are over due for a bounce, don't run out and buy any stocks yet! You don't have to pick tops and bottoms to make good money. It is the meat in the middle of a trend that will line your pockets, and the trend remains down until further notice.
Elsewhere today, the Dollar made strong gains again, mainly against the British Pound, but all of the major currencies were lower against the Dollar today. Commodities were generally lower today, lead down by Gold, as traders took the opportunity to book some profits after the bounce in the metal at the end of last week. Treasuries were modestly weaker on the session.
Scott Cole
www.theultimatestocktradingsystem.com
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