Tuesday, December 2, 2008

Morning Update 12/2

Good Morning:

Hopefully we won’t have nearly as exciting of a day today as we did yesterday! That was the 4th largest market decline in history!

DOW futures are up about 120 points 30 minutes prior to the open.


Last night Australia lowered rates by another full 1%. Remember that they were a major destination of the carry trade. The more they lower, the more that trade unwinds.

Qantas is in talks to merge with British Airways.

GE warned for Q4 profits as well as lowered their estimates for 2009. They say, however, that they will maintain their dividends at their current level. Sure, that’s what they all say…

Estimates are now saying that Goldman will lose close to $5 a share next quarter. They are lower again this morning after a horrid performance yesterday.

The bond market reversed direction, but that is to be expected following such a large move yesterday.


I still see two possibilities… either we are in wave B up/sideways or we just started wave 5 down. The impulsiveness of yesterday’s move suggests the later is likely.

My short term technicals show that we are oversold and that some upside is possible here.

The key next key level on the down side is the 61.8% retrace level, about 800 on the SPX or about 8,000 on the DOW.

Here’s a Point & Figure chart that shows a technical reversal and breakdown from yesterday. I sometimes use these charts because they clearly show breakouts and can give you an idea of an initial target. This chart is targeting the 740 area:

In this next chart you can see that we closed just below the 50% retrace level yesterday and that the 740 target area on the P&F chart is near the recent lows.

Okay, we just opened up and the DOW is now only up 62 points.

Should be an interesting day, Have a good one,