January 25, 2008 Stock Market Recap
The bounce is going according to the textbook so far. Both the Nasdaq and S&P 500 were rejected from their August lows today. That’s a classic case of former support turning into resistance. Today’s action created bearish engulfing candlestick patterns (and outside reversals) on the S&P, Nasdaq, QQQQ as well as many individual stocks. One small plus for the bulls is that volume decreased today. Follow-through on today’s selling could be an issue as people jockey for position ahead of Wednesday’s Fed meeting.
Everything is back to down again…
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Down | Down | Down(-) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
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January 26th, 2008
Bottom Line: The average Joe six pack is a baby boomer quickly running out of time. His single largest asset, his primary residence, is deflating rapidly. This single largest asset is also the primary collateral for his single largest liability. His balance sheet is rapidly deflating as all his assets, from his home to his equity portfolio, all simultaneously deflate while his debt outstanding may actually still be increasing. His debt servicing are costs not dropping, despite aggressive rate cuts, and may actually be rising. It has also become damn near impossible to refinance certain mortgages as easy credit evaporates. On top of that, Joe six pack should now be seriously concerned about his job security. So when a cheque for $300 to $1500 arrives in the mail, Joe six pack is not going to spend it on a $200 steak dinner or a new computer or on a vacation. Got it people?
More on the stimulous package: (http://benbittrolff.blogspot.com/2008/01/fact-sheet-bush-stimulous-package.html)
TheFinancialNinja