Friday, January 2, 2009

End of Day/ End of Week - Lookin' Out for Love...

Okay, since I’ve been in a musical mood bringing in the New Year, here’s Lindsey Buckingham emotionally strumming and singing about what surely has to be financially related business…

Looking out for Love:

Well, I’ve been just stepping aside and letting the market run here into overbought territory, but I couldn’t help but take a small short position just prior to the close…

For the day the DOW closed up 258 points (2.9% - btw, at 9,034, see prior update), the S&P finished up 3.2%, the NDX led the way, up 4.3%, the RUT was the laggard up only 1.3%. Notable, the XLF only finished up 1.1%, and USO finished up a whopping 7.64%.

If you would like to know a site I use a lot for fast updates, this market summary page will give the fastest glimpse at what market segments are leading and which are trailing… check out the Disk Drives, Semis, and Oil Services: – Market Summary.

Here’s a new site with some neat ways of presenting market info: Check out their maps…

Okay, let’s take a look at a 5 minute SPX chart. Basically a straight line up for the past 4 trading sessions. This looks like 5 waves up to me, all of equal length. There’s a pivot point at 935 that stopped the advance, and since all the short term oscillators are WAY overbought, I took a stab with a small short play at the 935 level (961 is the next higher pivot). This will be a very short term trade. If we break above 935, I’ll exit and look for re-entry later, but I’m thinking we should see some sort of pullback on Monday. My thinking goes like this: we are in the large wave ‘B’ up/sidways and this is wave ‘c’ up within wave ‘B’. Within wave ‘c’ up, we should have another smaller a-b-c. This 5 wave move may have completed, or nearly completed wave ‘a’, and we should get a wave ‘b’ followed by a final wave ‘c’ up of wave ‘c’ up. Make sense? That final wave ‘c’ should carry us to about the 1,000ish range on the S&P. I could be early, this wave ‘a’ of ‘c’ may not be complete, but it looks like it to me. Also, all of the short term stochastics are very overbought.

Next let’s look at the SPX 1 month daily. Here you can see a great big 35 point range candlestick that closed above the upper Bollinger. Finding plays outside the limits of the Bollinger bands are frequently some of my best. Typically you will get a pullback at least down to within the confines of the bands before climbing significantly. Doesn’t mean that it can’t happen, but there’s obviously more room down than up, despite the positive momentum and what the media pronounces. Also note that the daily fast stochastic is nearly overbought as is the RSI.

Here’s the DOW daily. Again, note the close above the upper Bollinger, and rapidly climbing stochastic and RSI. The volume here shows that today’s was slightly less, but the DIA and SPY both show that the volume was higher. That’s confirmation of higher prices and is, in fact, the first rally in a very long time where the volume has been rising with prices, although it is still light. While I’m thinking of it, advancing issues were about 5 to 1 on the NYSE today, again very positive.

Finally, this last chart is a busy view of the past 3 months of sideways action on the DOW. You can see that we have exceeded the range of the past month, but there is still resistance above.

The market pumpers are really out in force today. I can’t tell you how many times I’ve heard that the market rallying on bad news is good news and shows how “healthy” the market is. “The market leads the economic upturn… It’s a forecasting mechanism… The stock market’s on sale… The bottom is in…” Blah, blah, blah… almost always words spoken by those who are trying to take your money – what a bunch of bull. Just a reminder to ask yourself what they were saying at the beginning of last year (the same thing!).

And for more in the bad news is good news category, you saw what the technology sector did today, here’s the semiconductor sales report for November. Those types of precipitous declines do not end suddenly, sorry…
Global Semiconductor Sales Decline 9.8% in November

By Chiara Remondini

Jan. 2 (Bloomberg) -- Global semiconductor sales fell 9.8 percent in November, the second straight monthly slide, as a deteriorating economy hurt chip demand, an industry group said.

Total sales fell to $20.8 billion from $23.1 billion a year earlier, the Semiconductor Industry Association said in a Business Wire statement today. In the first 11 months of 2008, sales rose 0.2 percent to $232.7 billion from a year earlier. In October global chip sales declined 2.4 percent.

“The worldwide economic crisis is having an impact on demand for semiconductors, but to a lesser degree than some other major industry sectors,” George Scalise, president of the San Jose- based association, said in the release.

Researcher iSuppli Corp. forecast Dec. 16 that global stockpiles of semiconductors will almost triple in the last quarter of 2008 and issued a “red alert” on chip inventory levels for the first time. Gartner Inc. projected worldwide chip sales will fall 16 percent in 2009 and the Semiconductor Industry Association forecast global chip sales will drop 5.6 percent this year, the first decline since 2001.

And here’s more Lindsey Buckingham playing what could be this market’s theme song – amazing he doesn’t break any strings:

Go Insane: