The market found someone to say 'uncle'

Hi there,
welcome back to the Stockchartsrus Blog.


On a day where the US Federal Reserve Board cut its short term interest rate by 75 basis points the S&P 500 rallied more than 4 percent. As the chart above suggests, the lows of January have been tested and the 4 year business cycle moving average has held. While it will take a close back above $140 on the SPY's to register a weekly buy signal, the market has registered daily buys suggesting a seasonal bounce. The fallout from both a collapsing US housing market and the subsiquent mortgage backed securities debacle has claimed its first (and the market hopes) the last victim, The Bear Stearns Company. The stock topped out during the housing mania a couple years ago above $150/share. Over the weekend it was announced there would be a mercy takeover of the company by JP Morgan at $2/share! Isn't capitalism wonderful....

In short, no reason to get bullish yet but maybe the worst is behind us...
Until next blog,
Brian

The Market Woes Continue

Hi there,
welcome back to the Stockchartsrus Blog.



Today we will look once again at the S&P 500 depository receipts (SPY). The potential bottom we talked about last blog has yet to be confirmed. Additionally, a move below the low of $126 (from 01/22/08) will signal yet another sell signal and suggest prices may need to move toward the $120 area. The Cliche, 'Its always darkest before the dawn' seems appropriate. Keep in mind, the US market (as measured by this broad basket of stocks) is now down more than 12% YTD so traders will be looking for any type of rally to save their February. As well, the market is flirting with the 4 year average price at or near $126. In other words, the market isn't over-valued any more.

In a sentence: While there is no buy, the market is cleaning itself up.

Until next blog,
Brian Beamish FMA FCSI

Hello and Welcome to the StockChartsRUs Blog

Hello and welcome to the Blog spot for StockChartsRUs.

We will begin this blog with a quick overview of the broader market through the S&P 500 depository receipts (SPY). This is a great vehicle for analyzing the stock market as it represents and index of the 500 biggest issues in the US market.

Here is the Weekly Chart for the SPY:



Three things jump out at me when I look at this chart
1. The broader market flashed a 'sell' signal in early Nov. '07 when the 13 period exponential moving average (which is an excellent gauge for the short term trend of the market) crossed below the 30 period simple moving average (which is an excellent gauge for the medium term trend of the market).
2. The market has moved back into support near the 200 week simple moving average (also known as the 4 year business cycle moving average).
3. the market is now trading in the lower trading range of its current up trend channel.

Conclusions:
The market is still 'consolidating' its recent breakdown and therefore still contained in its current downtrend. That trend will change once a 'double bottom' is registered (in this case a close above $140 will confirm).
From a longer term perspective, the euphoria of the market has been cleaned out and we MAY be setting the stage for the next leg higher.
From a historical perspective, US presidential election years are typically flat for the first half then once the unknown has been priced into the market it does well into the end of the year. As well, many banks are reporting poor numbers due to the 'housing crissis' and the market cannot move forward without their participation. It will take at least a couple more quarters to get their balance sheets looking respectable again.......In other words, hurry up and do nothing!

Brian Beamish FMA, FCSI