Tuesday, March 31, 2009

Dow & S&P 500 market analysis for 03/31/2009 Tuesday

Dow & S&P 500 market analysis

Things are looking very down today. However before any big tank, the stock/index will always go back up to test resistance first. The first important resistance is the 800-805 region for S&P. The next one would be at 825. If we do not break above these 2 resistances within the next few days, we might be going down to 750 within this week.

Direction for 03/31/2009 Tuesday: Gap up and then down

Crude Oil (USO)

Crude and USO should be going down today. USO should be going down to 27.5 before turning up to making new highs at around 38 by the end of next month.Direction for 03/31/2009

Tuesday: Downside consolidation

Sunday, March 29, 2009

Dow & S&P 500 market analysis 03/30/2009 Monday

Dow & S&P 500 market analysis

This week, we are looking at strong resistance for the S&P at 833 and then 842. The flattish movement of the S&P indicates that the current uptrend is tapering off. However we might get a bullish Monday or Tuesday but if the S&P does not break through above 842, we will be in for a prolonged down period in the markets that might go down 600.

Direction for 03/30/2009 Monday: Up


Crude Oil (USO)

Crude and USO are trending down as expected. We might see USO move down to hit the 20 and 50 day moving average support at around 28 before reversing back up.

Direction for 03/30/2009 Monday: Downside consolidation

Friday, March 27, 2009

Dow & S&P 500 market analysis for 03/27/2009 Friday

Dow & S&P 500 market analysis

Today, the market should be coming back down to test support at 810 and then 800. We are most probably going up to 850 only next week. It should be a flattish day today.


Direction for 03/27/2009 Friday: Downside consolidation


Crude Oil (USO)

Crude and USO will be trending down today to test support too. Support at 31 for USO and 52.6 for /CL. We will be seeing more upside next week.

Direction for 03/27/2009 Friday: Downside consolidation

Thursday, March 26, 2009

Dow & S&P 500 market analysis for 03/26/2009 Thursday

Dow & S&P 500 market analysis

The market tanked as expected, went past the 800 support and hit the hourly 50 period moving average at around 790 and rallied back up above 800 in the last hour. This indicates that the market is still in an uptrend up to 850. From the looks of it, I do not think the S&P will rally to 900. We are actually in a downtrend and this is a bear market rally.

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It will most probably reverse back into a downtrend after rallying to 850. Anyway we shall see about that in the next few days.

Direction for 03/26/2009 Thursday: Up


Crude Oil (USO)

Crude and USO are finally showing some weakness. We shall see in the next few days whether there are any breakout signals.

Direction for 03/26/2009 Thursday: Sideways

Wednesday, March 25, 2009

Dow & S&P 500 market analysis for 03/25/2009 Wednesday

Dow & S&P 500 market analysis

From yesterday’s movement, I believe the market is currently at the crossroads now. Today will most probably be a down day. But how much it tanks will determine whether it is a reversal or just a dip on an uptrend. The first significant support would be 800. If it tanks past this support, the next significant support would be 750. This would indicate that the uptrend had ended. However if it bounces at 800, then this is just a dip on the uptrend and we are going for 900 on the S&P.

Direction for 03/25/2009 Wednesday: Down


Crude Oil (USO)

Crude will range-bound till the end of the month or the end of this week to be precise. It should remain this way until it forms a breakout pattern.

Direction for 03/25/2009 Wednesday: Sideways

Tuesday, March 24, 2009

Dow & S&P 500 market analysis for 03/24/2009 Tuesday

Dow & S&P 500 market analysis

Oh well…Timothy finally managed to surprise all of us with a new idea to get us out of the financial mess. This caused the market to rally 7% up throughout the day and stopping at resistance at 820 on the S&P. Rallies due to positive news reports these days seem to frizzle out within 24 hours. Today, I’ll be monitoring if this rally has strength to continue. This rally may reverse either today or tomorrow and form a doji on daily charts. I still regard this rally as a dead cat bounce and the market is going to tank to 750 and maybe beyond in the next 1-2 weeks.

Direction for 03/24/2009 Tuesday: Upside consolidation


Crude Oil (USO)

Crude should follow the S&P in the next few days. It is due to reverse but is showing strength due to positive news reports.

Direction for 03/24/2009 Tuesday: Upside consolidation

Monday, March 23, 2009

Dow & S&P 500 market analysis for 03/23/2009 Monday

Dow & S&P 500 market analysis

The market tanked as expected on Friday, hitting the daily pivot support and closing there. Today, we will be in for a bit of bounce. On the hourly charts, S&P is currently sitting on the 50 day moving average and is going to bounce a bit. Whether this follows through will depend on the Existing Home sales and the speech by Timothy Geithner after market open today. But my feeling is that the market may tank after the speech and the week may end down.

Direction for 03/23/2009 Monday: Down


Crude Oil (USO)

Crude did not reverse down due to news late last week.

http://www.forbes.com/feeds/ap/2009/03/20/ap6195780.html

This caused crude to consolidate instead when the indicators are pointing to a reversal. Crude has to retest support in order to continue its rally. I believe crude will start to see strength only after March.

Direction for 03/23/2009 Monday: Down

Friday, March 20, 2009

Dow & S&P 500 market analysis for 03/20/2009

Dow & S&P 500 market analysis

Today, everything is pointing to a down day. The monthly pivot resistance on both indexes coinciding with both the S&P 500 and the Dow failing to break above their respective 50 day moving averages+ the high-up-there McClellan Oscillator indicating an overbought market, indicates that it is now inevitable that we will experience a few down days. I believe the S&P should tank to around 750 in the next 2-5 days. Anything beyond that would indicate that the market may tank much more and that the uptrend is over.

Direction for 03/20/2009 Friday: Down


Crude Oil (USO)

Crude is close to its monthly pivot resistance and has hit XOP based on fibonacci. It should not go through a period of weakness before it can continue rallying. I believe crude would be a good long term play based on the hyperinflation that should hit us in the coming months. We can buy the USO ETF as a hedge against inflation.

Direction for 03/20/2009 Friday: Down

Thursday, March 19, 2009

Dow & S&P 500 market analysis for 03/19/2009

Dow & S&P 500 market analysis

Oh well….the Fed surprised everyone including me with their announcement that they will buy up large quantities of Government debt. I thought bailouts were the best idea they could come up with.

http://www.cnbc.com/id/29768406

This caused a huge rally after the announcement was made. But the rally stopped short of the 50 day moving average on the S&P 500.

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Today I believe the index should be attempting to break above it, failing which, we may be back for 1-2 more down days.

Direction for 03/19/2009 Thursday: down


Crude Oil (USO)

USO broke above the 50 day moving average and did not tank below for the 2nd day. Today it may meet some resistance at 30 which I believe it should break above with ease.

Direction for 03/19/2009 Thursday: Down then up

Wednesday, March 18, 2009

Dow & S&P 500 market analysis for 03/18/2009

Dow & S&P 500 market analysis

Tuesday rallied as expected but it was a bit overdone. I expect the indexes to consolidate and move more or less flat in the morning before the Fed releases the FOMC statement at 2.15pm Eastern Standard time. Which direction the market goes after that will depend on the contents of the statement but I suspect that it should tank the market a bit. However we are still in a bear market rally and will continue to be unless the S&P break down below 730.

Direction for 03/18/2009 Wednesday: down


Crude Oil (USO)

USO broke up above its 50 day moving average. This means that USO or crude is now in an uptrend. I believe USO should rally to around 52. However today, USO has to tank to test support at 28.5 before this rally could become sustainable.

Direction for 03/18/2009 Wednesday: Down then up

Tuesday, March 17, 2009

Dow & S&P 500 market analysis for 03/17/2009

Dow & S&P 500 market analysis

Everything looked good for a rally yesterday except for the 5th candle reversal that I failed to notice. This does not mean that the market is on a downtrend but rather it is now going back down to test support before any sustainable rally can happen as we move into the most bullish month of April. Today, the S&P 500 will be testing support at around 750 and 730. If either of these 2 supports hold, we will be moving up to 800.

Direction for 03/17/2009 Tuesday: down and then up


Crude Oil (USO)

Crude is still in a consolidation phase. I’m favoring a break up after a day or two of consolidation.

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As you see, the moving averages are converging. Every time this happens, the underlying will go through a period of sideways movement.

Direction for 03/17/2009 Tuesday: Sideways

Monday, March 16, 2009

Dow & S&P 500 market analysis for 03/16/2009

Dow & S&P 500 market analysis

The market is on a run now. It should be moving up to meet its 50 day MA at 800 for the S&P 500. We are now moving into the bullish month of April. I’m expecting the indexes to pull back in the morning and then continue to rally to 800 and then break it as we move into April.

Direction for 03/16/2009 Tuesday: Up


Crude Oil (USO)

The 20 day and 50 day moving averages for USO are converging. This indicates that USO will be going through a consolidation phase. We might see a day or two of sideways movement. I’m expecting USO to break up above the 50 day moving average in a few day’s time.

Direction for 03/16/2009 Tuesday: Sideways

Wednesday, March 11, 2009

Dow & S&P 500 market analysis 03/12/2009

Dow & S&P 500 market analysis

The market made a good rally throughout the day only to fail after the Dow had hit resistance at 7000. This resistance is not a technical but a psychological one and failing it means that the market as a whole is still not ready for a rally. Today, having failed 7000 on the Dow, the market is ready for a tank. Whether this tank has legs will depend on whether the Dow will break 6800 and S&P will break 710.

Direction for 03/12/2009 Tuesday: Down


Crude Oil (USO)

Crude rallied together with the market only to turn and fail the 50 day moving average. This failure to break the 50 day MA indicates that it may move down to take out its previous low at 22.7 on USO.

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Direction for 03/12/2009 Tuesday: Down

Dow & S&P 500 market analysis for 03/11/2009

Dow & S&P 500 market analysis

Yesterday the SPX broke all resistances. Today I believe S&P 500 will move down in the first half of the day to test support at 700 before rallying up to test resistance of the 20 day moving average. Any further upward movement will depend whether it breaks this moving average resistance.

Direction for 03/11/2009 Tuesday: Up


Crude Oil (USO)

Crude is testing its pivot support and also fibo support now at 44.7. It is poised to rally up further.

Direction for 03/11/2009 Tuesday: Up

Tuesday, March 10, 2009

Dow & S&P 500 market analysis for 03/10/2009

Dow & S&P 500 market analysis

Again the market defied my market analysis and the divergence in the hourly MACD and tanked all the way around an hour after market open and closed down for the day. The way the S&P 500 failed the 20 SMA (blue line) shows that the market is not ready for a bounce yet.

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Today, I believe that if the S&P 500 fails to break up above 699.38, then it may tank and make a new low. However we may be close to a possible bottom.

Direction for 03/10/2009 Tuesday: Down


Crude Oil (USO)

Crude (/CL) gapped up above resistance at 46.9 early yesterday and trended up the whole day after market close. Both Crude and USO are in a confirmed uptrend today.

Direction for 03/10/2009 Tuesday: Up

Friday, March 6, 2009

Dow & S&P 500 market analysis for 03/09/2009

Dow & S&P 500 market analysis

The indexes seemed to have found a support on the S&P 500 at around 666.79. This seems to be close to an evil number…

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The MACD on the hourly charts for the S&P 500 is showing a divergence UP. This coupled with the sudden spike in the last hour indicates that we might have a bounce early next week. The McClellan Oscillator also indicates this. However we might be experiencing a bit of weakness in the markets in the first half of the day before any sustainable rally could happen.

Direction for 03/09/2009 Monday: Up


Crude Oil (USO)

Both Crude and USO had tested support on Friday. Today, it will be on its 3rd wave up to 31 for USO.

Direction for 03/09/2009 Monday: Up

Halting the slide in the Dow and S&P 500 and solving our economic woes

Some information from my trading buddy Madscientist about the best way to solve our current economic crisis and the never-ending slide in the stock markets.


"[Sweden] took over the banks, nationalized them, got rid of the bad assets,
resold the banks and, a couple years later, they were going again. So you'd
think looking at it, Sweden looks like a good model. Here's the problem;
Sweden had like five banks. We've got thousands of banks.
-- President Obama

Fair enough. Then again, I don't think anyone has called for every American
bank to be nationalized. Just the bad ones. In fact, I'd be content with
just two: Citigroup and Bank of America.

Why? A few reasons. First, Citigroup has $93 billion of tangible equity,
most of which is claimed by preferred shareholders, almost all of whom are
the government. Bank of America has a market cap of $29 billion, after Uncle
Sam pumped in $45 billion of capital. Anyone who thinks these two aren't
already effectively nationalized is fooling themselves.

Second, let's be real: What are our other options? First Hank Paulson, and
now Treasury Secretary Tim Geithner, have been running in circles for almost
five months, trying to craft a plan to purchase toxic assets at some
Goldilocks number that's high enough to keep banks intact yet low enough to
avoid a taxpayer ripoff of Madoffian proportions.

While we've yet to see exactly what Secretary Geithner has in mind, 2+2 will
never equal 1,000, no matter who's in charge. In the end, taxpayers are
guaranteed to swallow the amount between what banks need to stay afloat, and
what the market is willing to pay for toxic assets. By any estimate, that'll
end up as a massive wealth transfer from taxpayers to bank shareholders and
bondholders. If Merrill Lynch's $30 billion CDO sale for the equivalent of
$0.06 on the dollar is any indication of private thirst for these assets,
the taxpayer-to-shareholder wealth transfer could easily approach trillions
of dollars.

Anyone in favor of that?

Didn't think so.

Now, this hardly means I'm an anti-TARP-ian. I realize this debate is as
heated as it gets, but the $700 billion bank bailout was never a plan to
save consumers' love for American Express, nor a strategy to "get banks
lending again." It was, from Day 1, a Hail Mary endeavor to halt a run on
the banks that threatened the collapse of everyone from Goldman Sachs to
JPMorgan Chase, as well as, according to Congressman Paul Kanjorski, "the
end of our economic system and our political system" and the entire global
economy within 24 hours. Say what you will. I think TARP was undeniably
necessary.

But now that last fall's all-out panic has subsided, we need a long-term
solution to getting our largest banks back on track. Doing nothing isn't an
answer -- they can't survive on their own. Hoping to lure in private capital
to purchase toxic assets is fundamentally flawed -- investors can already
buy assets. They either choose not to, or banks aren't accepting their bids.
"Ring-fenced" asset guarantees are as un-transparent as it gets. Hoping
legacy management will get right what they've proven spectacularly incapable
of brings new meaning to "moral hazard." Our current plans are not, and
likely will not, work.

So, what's the solution?

Just bite the bullet already

However the "stress test" the Treasury is toying with works, I have a
suggestion: Don't give "contingent capital" to those deemed unstable; give
them a contingent funeral. Nationalize them. Wipe out shareholders. Strip
them down. Hose them off. Replace management. Fire the board of directors.
Quarantine the bad assets. Don't worry about trying to find a "fair price"
for assets. Just hold them for Pete's sake. Then, as soon as possible, spin
off the stripped-down, streamlined, lesson-learned banks back into the
private market. The quicker, the better.

Bottom line

There are several banks that kept their noses clean during the boom years --
including Wells Fargo, BB&T, and US Bancorp -- that will probably make it
out alive. There are also a select few that have proven utterly incapable of
surviving as private firms. They need to go.
The U.S.'s top economists and politicians spent years criticizing the
Japanese for trying to resuscitate zombie banks. Now, we're hoping to avert
a "lost decade" of our own by resuscitating a problem that's magnitudes
greater, even though we know the catalyst that finally pulled Japan out of
its slump was wiping the slate clean and starting anew. It makes no sense.
Nonetheless, we now realize why it took Japan so long. Nationalizing is
politically detested and free-market suicide. It's the last thing anyone
wants. No one doubts that. Regardless, Japan taught us exactly what not to
do. I hope we learned its lessons."

by Morgan Housel
February 13, 2009


I myself believe this is the best way forward. However after studying so much about the history of mankind, i can conclude that human beings do not learn from history.

Distorted Dow

This is what we discussed with my trader group Wealthpot9 on 30th Jan 2009. And this is also the reason why i do not trade the DJIA these days.


Bianco: The Dow is Distorted
January 21, 2009



Guest commentary by James A. Bianco, Chief Executive Officer, of Bianco
Research, LLC



Comment - The Dow Jones Industrial Average (DJIA) is a price weighted index.
The divisor for the DJIA is 7.964782. That means that every $1 a DJIA stock
loses, the index loses 7.96 points, regardless of the company's market
capitalization.



Dow Jones, the keeper of the DJIA, has an unwritten rule that any DJIA stock
that gets below $10 gets tossed out. As of last night's close (January 20),
The DJIA had the following stocks less than $10...



Citi (C) = $2.80

GM (GM) = $3.50

B of A (BAC) = $5.10

Alcoa (AA) = $8.35



If all four of these stocks went to zero on today's open, the DJIA would
lose only 157.3 points.



The financials in the DJIA are...

Citi (C) = $2.80

B of A (BAC) = $5.10

Amex (AXP) = 15.60

JP Morgan (JPM) = $18.09

If every financial stock in the DJIA went to zero on today's open, it would
only lose 331.25 points, less than it lost yesterday (332.13 points).



If you want to add GE into the financial sector, a debatable proposition,
then:



GE (GE) = $12.93



If the four financial stocks above and GE opened at zero today, the DJIA
would only lose 434.24 points.



The reason the DJIA is outperforming on the downside is the index committee
is not doing it job and replacing sub-$10 stocks and the financials are so
beaten up that they cannot push the index much lower.



So what is driving the index? The highest priced stocks:



IBM (IBM) = $81.98

Exxon (XOM) = $76.29

Chevron (CHV) = $68.31

P&G (PG) = $57.34

McDonalds (MCD) = $57.07

J&J (JNJ) = $56.75

3M (MMM) = $53.92

Wal-Mart (WMT) = $50.56



For instance if all the sub-$10 stocks listed above, all the financials
listed above and GE opened at zero, the DJIA loses 528.63 points. To repeat
if C, BAC, GM, AA, JPM, AXP and GE all open at zero, the DJIA loses 528.63
points.



If IBM opens at zero, it loses 652.95 points. So, the DJIA says that IBM has
more influence on the index than all the financials, autos, GE and Alcoa
combined.



The DJIA is not normal as the Index committee is not doing their job during
this crisis, possibly because to the political fallout of kicking out a Citi
or GM. As a result, this index is now severely distorted as it has a tiny
weighing in financials and autos.



We thank Jim Bianco for giving us permission to share his firm's research
with our readers.

by MadScientist
on Fri Jan 30, 2009 3:48 pm

Dow & S&P 500 market analysis for 03/06/2009

Dow & S&P 500

The market direction will depend a lot on the non-farm payroll report today. The futures are moving flat now just waiting for this report. However I’ve got a feeling that the report may be bad and we will be going for one more tank before the long awaited bounce into April happens. If the report turns out to be bad, we might just tank to find support maybe at around 656 on the S&P 500 in the first hour of market open. If it turns out to be good, the market will then announce that the “worst” had passed and then bounce will then occur and we might be going up to around 720. According to my analysis, this is not in any case the worst of the year.

Direction for 03/06/2009 Friday: Down


Crude Oil (USO)

Crude and its corresponding ETF, USO have both made higher highs and are poised to break resistance at the high made 2 days ago. Once it break this resistance (45.76 for /CL & 27.8 for USO) we might see oil run up. However today, we might see crude retrace to test support before any bigger movement up.

Direction for 03/06/2009 Friday: Down

Thursday, March 5, 2009

S&P 500 chart with Elliot Wave Analysis and Citibank



This is the chart for Citibank. The once storied bank fell from a high of $51 and is now at around $1.



Also, I had been counting the Elliott waves from the peak of 1570 in the S&P from September 07. It is really interesting to find that we may be on the 5th and last wave down and within this last 5th wave down, we are on the 3rd wave down. Somewhere at the end of this 3rd wave, there may be a bounce from the 4th wave up. So be careful always and happy trading!

Dow & S&P 500 Market Analysis for 05/03/2009

Dow & S&P
Today, the indexes are going to test support again at 695 for the S&P and before any bounce back up. The indexes are too far out of their moving averages and should be moving back up to meet either the 50 SMA on the hourly charts before breaking up, above the MA.

Direction for 05/03/2009 Thursday: Gap down then up


Crude Oil (USO)

USO is poised to break up, above resistance at 27.7 and move up to 31. It should break the 27.7 resistance anytime today.

Direction for 05/03/2009 Thursday: Up

Wednesday, March 4, 2009

Dow & S&P 500 market analysis for 04/03/2009

Dow & S&P 500 market analysis

The Dow and S&P 500 futures trended up throughout the whole night and is now at the pivot resistance and is showing MACD divergence. This means that the indexes are due for a retracement down. As I’ve said last night, if S&P 500 fails to break above 712, we might be going for a lower low. I believe we will be going back down to test this support today.

Direction for 04/03/2009 Wednesday: Gap up then down



Crude Oil (USO)

Crude rallied overnight and broke pivot resistance. If it fails to come back down to below 43.6 (for /CL for TOS charts), we might be going for 46 and above. This is around 28 for USO.

Direction for 04/03/2009 Wednesday: Up

Tuesday, March 3, 2009

Dow & S&P 500 market analysis for 3rd March 2009

Dow & S&P

My indicators suggest a bounce for the indexes. 700 on the S&P is a very important support level and with McClellan so low now at -290, the probability of a bounce is very likely now. This bounce should be a big one and bring the S&P up to around the 800 region.

But if the S&P fails to break above 721 soon, the downtrend may still continue and we may be seeing the high 500s soon.

Direction for 03/03/2009 Tuesday: Gap up and up



Crude Oil (USO)

USO should be going up to test 20 day MA soon. March is a bullish month for crude and USO so I believe USO may be bottoming out from its long long downtrend soon.

Direction for 03/03/2009 Tuesday: Up

Monday, March 2, 2009

Dow & S&P 500 market analysis

Index futures tanked overnight and into new negative territory. We are now lower than the 2002 lows and the Nov 2008 lows. Where we will be going now remains to be seen. In the bigger picture, we may now be tanking down to 700 for the S&P with resistance at 768. However for intraday, I believe we may gap down and consolidate a bit today before continuing the downtrend with possible resistance at 730 and support at 713.

Also news is very bad now with HSBC requiring more capital to tide through the crisis.http://www.cnbc.com/id/29460216

Direction for 02/03/2009 Monday: gap down and then down

Crude Oil (USO)

Crude tanked together with the indexes overnight. Crude is now in a downtrend together with S&P and USO. 27.5 is a strong resistance for USO. Pity my order to buy puts didn’t get filled on Friday. There’s a high possibility that USO may tank to 8.40 before this long long downtrend from last July will finally end.

Direction for 02/03/2009 Monday: gap down and down

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