Tuesday, December 2, 2008

End of Day 12/2

Nice move the last hour to ram the indices to the high of the day…

The DOW finished up 270, the S&P finished up 4%, the NDX finished up 3.6%, and the RUT led the advance with a + 5.9% showing.

Interesting pattern… could we be setting up another triangle? NOOO, not another triangle! You guys know how difficult they can be to trade. I’m not saying it’s happening, YET, but it’s a possibility and if it continues to smell that way I’ll continue to play small or not all! Well, maybe just a scalp here and there!

FUNDAMENTALS:

We got to hear some lip service out of Obama as he met with state Governors this morning. He basically restated his STIMULATE mantra, fast, fast, more, more!

Ford’s Mulally tried to role model good behavior by offering up his corporate jet and only taking a $1 salary if they get government money! Ha, ha, who is he kidding? Not me, I know how they get their compensation, and their annual salary is a pittance compared to the rest of it. Other than that, he HAD NO PLAN to move forward to profitability.

In other words, still no realistic change to any of the fundamentals that I can see.

TECHNICALS:

Today’s advance appears to be on mixed, but certainly not light volume. It’s slightly lower than yesterday’s on the DOW, but higher on the DIA and SPY. Higher volume also on the XLF.

We got a pretty bullish jump off the 50% fib line and closed above the 38.2%.

Here’s what the SPX looks like on a 3 month daily:



Note that we are still following the black down-trendline from back in September. Also note that the daily fast stochastic at the bottom of the chart (black line) has rolled over and is pointing down. It’s not technically a sell signal until it crosses the slow (red line). The SPX regained the 840 area, but failed to get above the 850/855 region, so it seems to once again be drawn like a magnet to that old blue line which represents the bottom of the OLD triangle.

Interesting, but non-definitive. I see several other POTENTIAL patterns, but will save them until they are better formed.

Market internals were mixed, but advancing issues did outpace declining issues pretty strongly.

The VIX closed down 8% at a still elevated 63, and the bond complex is still shouting deflationary credit collapse and diverged against equities today (quantitative easing?).

Frankly, today looked reasonably bullish if you discount the bond market, especially in the fact that the market was able to come back so strongly after cliff diving earlier. It produced a higher low on the day and left my very short term indicators in a mixed state that make it difficult to call for tomorrow. Thus I am neutral and back to the safety and comfort of cash.

I hope you had a good day and we’ll try it again tomorrow. I’ve been working on an article that got a little bit out of hand length wise, so I have split it in two and should be getting at least one of them out sometime soon.

Have a good evening,

Nate